Ozili, Pe e son K.
A icle
Bank non-pe o ming loans esea ch a ound he wo ld
Asian Jou nal o Economics and Banking (AJEB)
P o ided in Coope a ion wi h:
Ho Chi Minh Uni e si y o Banking (HUB), Ho Chi Minh Ci y
Sugges ed Ci a ion: Ozili, Pe e son K. (2025) : Bank non-pe o ming loans esea ch a ound he wo ld,
Asian Jou nal o Economics and Banking (AJEB), ISSN 2633-7991, Eme ald, Leeds, Vol. 9, Iss. 3, pp.
437-462,
h ps://doi.o g/10.1108/AJEB-09-2024-0103
This Ve sion is a ailable a :
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Bank non-pe o ming loans esea ch
a ound he wo ld
Pe e son K. Ozili
Cen al Bank o Nige ia, Abuja, Nige ia
Abs ac
Pu pose – This a icle p esen s a li e a u e e iew o bank non-pe o ming loans (NPLs) esea ch a ound he
wo ld and sugges s di ec ions o u u e esea ch.
Design/me hodology/app oach – The s udy used he hema ic and bibliome ic li e a u e e iew
me hodologies o p esen a e iew o he ecen NPL li e a u e ha ha e eme ged since 2020.
Findings – Signi ican NPL esea ch has eme ged om he Eu opean, Asian and A ican egions, while ewe
esea ch s udies ha e eme ged om he Asia–Paci ic, No h Ame ica, La in Ame ica and Ca ibbean egions as
well as om he Sou h Asian Associa ion o Regional Coope a ion and O ganiza ion o Economic
Coope a ion and De elopmen coun ies. The new NPL de e minan s in he ecen li e a u e a e co po a e
go e nance, in ech, inancial inclusion, coun y isks, egula o y quali y, poli ical isks, shadow banking
ac i i y, he COVID-19 pandemic, public and/o ex e nal deb , coun y isks, eal house p ices and he
independence o he cen al bank. The common egional NPL de e minan s a e co up ion, g oss domes ic
p oduc (GDP), deb , loan g ow h, in la ion, capi al adequacy a io, lending a e, compe i ion, he egula o y
en i onmen and GDP g ow h. The common heo ies used in he ecen li e a u e o explain he beha io o NPL
a e agency heo y, s akeholde heo y, in o ma ion asymme y heo y and mo al haza d heo y, while he
common empi ical me hodologies used a e he panel eg ession and sys em gene alized me hod o momen s
eg ession me hods.
P ac ical implica ions – Financial egula o s, bank supe iso s and banking schola s should pay a en ion o he
new eme ging de e minan s o NPL. They should also unde s and he e ec o NPL on inancial and/o banking
s abili y so ha sa egua ds can be pu in place o minimize he ad e se e ec o NPLs. Mo e esea ch is needed o
p o ide insigh s in o his a ea.
O iginali y/ alue – To da e, no s udy has p esen ed an o e iew o he pos -2020 NPL li e a u e o iden i y he
new de e minan s and e ec s o NPL ac oss se e al con ex s and egions.
Keywo ds Banks, NPL, Non-pe o ming loans, Resea ch, De e minan s, Li e a u e e iew, Wo ld
Pape ype Li e a u e e iew
1. In oduc ion
Bank non-pe o ming loan (NPL) (NPL) is a opic o g ea impo ance in he banking and
inance li e a u e. A NPL is a loan in which he bo owe has de aul ed in making epaymen o
he p incipal and in e es o a pe iod o ime usually 90 o 180 days (Fa n�
e and Vouldis, 2024).
NPLs a e mos ly associa ed wi h banks which a e deposi aking and lending ins i u ions.
Banks issue loans o c edi wo hy bo owe s and expec bo owe s o make epaymen o he
loan p incipal and in e es a a speci ic pe iod (T€
ol€
o and Vi �
en, 2021). Bo owe s may de aul
on loan epaymen . When hey do, he loan becomes non-pe o ming.
Bank NPL con inues o a ac he a en ion o bank manage s, academics, economis s,
bank supe iso s and inancial egula o s o se en easons. One, a high le el o NPL in he
banking sec o educes he abili y o banks o p o ide c edi o he eal economy o s imula e
p oduc ion and consump ion owa ds economic g ow h. Two, NPL is p ocyclical wi h
changing economic condi ions. This means ha NPL ends o be highe du ing economic
Asian Jou nal o
Economics and
Banking
437
JEL Classi ica ion — G21, G28
© Pe e son K. Ozili. Published in Asian Jou nal o Economics and Banking. Published by Eme ald
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The cu en issue and ull ex a chi e o his jou nal is a ailable on Eme ald Insigh a :
h ps://www.eme ald.com/insigh /2615-9821.h m
Recei ed 5 Sep embe 2024
Re ised 21 No embe 2024
26 Ap il 2025
Accep ed 28 May 2025
Asian Jou nal o Economics and Banking
Vol. 9 No. 3, 2025
pp. 437-462
Eme ald Publishing Limi ed
e-ISSN: 2633-7991
p-ISSN: 2615-9821
DOI 10.1108/AJEB-09-2024-0103
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down u ns and lowe du ing good economic imes as was obse ed du ing he 2007–2009
global inancial c isis and he COVID-19 pandemic (A i e al., 2020; Alnabulsi e al., 2022).
Th ee, NPL is impo an because minimizing he le el o NPL is a cen al objec i e o banking
supe ision. Fewe NPL means g ea e bank s abili y and low isk o a inancial/banking c isis.
Fou , NPL has a signaling powe because i can signal o in es o s and deposi o s ha a bank
has poo managemen quali y. I can also signal poo egula ion and supe ision o banks by
inancial egula o s and bank supe iso s.
Fi e, banks wi h a la ge loan po olio a e exposed o loan de aul o c edi isk when
un a o able economic condi ions and un o eseen changes in bo owe s’ cha ac e is ics make
i di icul o bo owe s o epay he loan owed o banks and o he lending ins i u ions
(Se ano, 2021). Six, la ge NPL on bank income s a emen will dec ease bank p o i , e ode
bank capi al, and make banks become inancially uns able. Se en, bank NPL is also impo an
o bank egula o s and supe iso s o inancial s abili y easons. Bank egula o s usually
de e mine he egula o y h eshold o banking sec o NPL (Kanoujiya e al., 2023). In many
coun ies, bank egula o s keep he NPL h eshold a a single-digi pe cen le el. A e
de e mining he h eshold, bank egula o s s i e o use mac op uden ial and mic o p uden ial
egula o y ools o in luence banks o mee he egula o y NPL a ge (Su�
a ez and S�
anchez
Se ano, 2018). Despi e a emp s by egula o s and supe iso s o con ol NPL, NPL is no
easy o con ol and may become e a ic due o loan eco e y p oblems and he many
un o eseen ex e nal ac o s ha a ec bo owe s’ abili y o epay loans as a when due (Bello i
e al., 2021; Foglia, 2022).
These issues ha e made bank NPLs he ocus o some hea ed deba es in he banking
egula ion li e a u e, and i ein o ce he need o e isi he de e minan s o NPL and i s
consequences on inancial ins i u ions and he economy. No ably, he e is g owing demand by
economis s and policymake s o insigh ul esea ch in o he non- adi ional de e minan s o
NPL and he likely e ec o NPL on banks and he economy in ecen imes. The demand o
such esea ch has ne e been highe han i is igh now, especially now ha policymake s a e
conce ned abou he po en ial e ec o geopoli ical ensions, ising in la ion and a i ade
wa s on bank NPLs. Valuable insigh in o he ecen de e minan s o NPL and i s e ec s can be
gained om a comp ehensi e e iew o he ecen NPL esea ch in he li e a u e. P esen ly, no
s udy has p esen ed an o e iew o a li e a u e e iew o he pos -2020 s udies. Exis ing
s udies ha e no examined he ecen non- adi ional de e minan s o NPL o i s e ec on he
economy. Ha ing iden i ied hese gaps, his s udy p esen s a comp ehensi e e iew o he
ecen esea ch in o bank NPLs om di e en egions o he wo ld o iden i y he non-
adi ional de e minan s o NPLs and he e ec o NPL on banks and he economy. I also
sugges s some di ec ions o u he esea ch.
Be o e p oceeding, I commend Manz (2019) and Chawla and Rani (2021)’s li e a u e
e iew ha p esen ed an o e iew o he de e minan s o NPL in he p e-2020 pe iod. The
p esen e iew complemen s he wo k o Manz (2019) and Chawla and Rani (2021) by
iden i ying he ecen de e minan s o NPL. Howe e , he p esen e iew is signi ican ly
di e en om ea ly li e a u e e iew s udies in se e al ways. One, he p esen e iew cap u es
new de elopmen s in NPL esea ch which a e no documen ed in ea ly li e a u e e iew
s udies. Two, he p esen s udy p o ides a bibliome ic analysis o he ecen de elopmen s in
he NPL li e a u e. Such analysis was no p o ided in p io li e a u e e iew s udies. Th ee, he
p esen e iew b eaks down he ecen NPL esea ch acco ding o egions, egional blocs,
coun y-speci ic and c oss-coun y s udies in o de o p o ide a good unde s anding o he
egional de elopmen s in NPL esea ch, and o make i easie o iden i y he gaps in he
li e a u e ha needs o be illed by u u e esea ch s udies. Such b eak down was no p o ided
in p io li e a u e e iew s udies. The e o e, he e is a need o p esen a comp ehensi e
o e iew o he ecen esea ch in he NPL li e a u e and o iden i y he new de elopmen s (i.e.
new de e minan s and e ec s) ha need o be singled ou and b ough o he a en ion o
schola s and policymake s o s imula e u he esea ch inqui y ha would expand he scope o
NPL esea ch and o e some di ec ions o u u e esea ch.
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The analysis in his e iew a icle con ibu es o he NPL li e a u e in se e al ways. One, i
con ibu es o exis ing li e a u e e iew s udies ha p esen an o e iew o he de e minan s o
bank NPL (e.g. Manz, 2019; Chawla and Rani, 2021), bu which ha e no p o ided an
o e iew o he non- adi ional de e minan s o NPL in he ecen li e a u e since 2020. Two,
he s udy con ibu es o he li e a u e by using a bibliome ic analysis o show academics and
esea che s he a eas whe e mo e collabo a i e esea ch is needed o ad ance he li e a u e.
Th ee, he s udy con ibu es o he NPL li e a u e ha examines he ins i u ional ac o s
a ec ing bank NPL (Hakimi e al., 2022; Giammanco e al., 2023; Ahiase e al., 2024). Fou , i
con ibu es o eme ging s udies ha examine he ad e se e ec s o NPL o bank pe o mance,
s abili y, and economic g ow h (Huljak e al., 2022; Duong e al., 2023; Sain and Kashi amka,
2023). Insigh s om his a icle can p o ide a be e unde s anding o how NPL a ec s banks
and he economy. Finally, he discussion in his e iew a icle can assis egula o s and
supe iso s in iden i ying he mac o “economic” and “non-economic” ac o s ha exe some
in luence on bank NPL which hey ha e no aken in o conside a ion in hei s ess es
ac i i ies.
The es o he s udy is o ganized as ollows. Sec ion 2 p esen s he me hodology used o
conduc he e iew. Sec ion 3 p esen s he bibliome ic analysis o he de elopmen s in NPL
esea ch. Sec ion 4 p esen s he hema ic e iew o he ecen NPL li e a u e. Sec ion 5
p esen s he ecen NPL esea ch a ound he wo ld. Sec ion 6 p esen s he me hodological
ad ances and issues in NPL esea ch. Sec ion 7 sugges s some a eas o u u e esea ch.
Sec ion 8 p esen s he conclusion o he s udy.
2. Me hodology
The s udy used he hema ic and bibliome ic li e a u e e iew me hodologies o conduc he
e iew. A hema ic e iew me hod is used o cap u e he majo esea ch a eas, hemes o issues
in he NPL li e a u e. A ep oducible sea ch s a egy, inclusion c i e ia and sc eening me hod
a e used o ob ain he a icles included in he hema ic li e a u e e iew. The i s c i e ion is he
a icle sea ch ins umen . The s udy used Google Schola as he main a icle sea ch ins umen
because i is conside ed o be he wo ld’s la ges sea ch engine ha indexes he ull ex o
me ada a o schola ly esea ch ac oss many disciplines. Google Schola is less es ic i e
compa ed o Scopus and Web o Science. Mo e a icles we e ob ained om Google Schola
compa ed o Scopus and Web o Science. Google Schola is mo e inclusi e because i allows
he use o access and e iew a icles which a e no indexed in he Web o Science and Scopus.
Google Schola also makes i easie o ind ele an a icles ha a e no indexed by o he sea ch
pla o ms. The second c i e ion is he sample pe iod. The sample pe iod o he e iew is om
2020 o mid-2024. This ensu es ha he s udy cap u es he ele an esea ch he NPL li e a u e
in he las i e yea s. The hi d c i e ion is language. Only he a icles published in English
language we e used o he e iew. The ou h c i e ion is he a icle sea ch and selec ion
p ocess. The a icles we e selec ed by inse ing he keywo d “non-pe o ming loan” in o
Google Schola sea ch engine. This app oach is impo an because i ensu es ha only he
a icles ha ocus on NPLs in he li e a u e a e selec ed. The esul ing a icles om Google
Schola sea ch we e used o conduc he li e a u e e iew. 372 a icles we e ound om Google
Schola sea ch esul s. The 372 a icles we e used o conduc he bibliome ic analysis in
sec ion 3. Howe e , o conduc he hema ic li e a u e e iew in sec ions 4 and 5, he 372
a icles we e u he sc eened o quali y o he esea ch, ype o jou nal, a icle duplica ion,
and non- ele ance o NPL. This p ocess educed he a icles o 96 a icles which include pee -
e iewed jou nal a icles and ew wo king pape s.
3. A bibliome ic analysis o he de elopmen s in NPL esea ch
This sec ion p esen s a bibliome ic analysis o NPL esea ch in he ecen li e a u e. The
bibliome ic analysis aims o p o ide a isualiza ion o he de elopmen s in he ecen NPL
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li e a u e and o unde s and he publica ion ela ionships. In his sec ion, he s ingen a icle
selec ion c i e ia in sec ion 2 a e elaxed in o de o ob ain a la ge numbe o a icles o he
bibliome ic analysis.
3.1 To al numbe o a icles and he egional ocus o egional NPL s udies
The o al numbe o a icles ound in Google Schola inc eased each yea om 2020 o mid-
2024 (see Figu e 1). I is also impo an o iden i y he geog aphical ocus o ecen NPL
s udies. Obse a ion om Google Schola sea ch esul s – om he i s page o he i een h
page o he sea ch esul s – show ha egional NPL s udies ocus mos ly on he Eu opean
egion, ollowed by he A ican egion, and he Asian egion (see Table 1). Rega ding he NPL
esea ch ocusing on he egional blocs, i can be obse ed ha some s udies examine NPL in
MENA, BRICS, Associa ion o Sou heas Asian Na ion and Gul Coope a ion Council (GCC)
coun ies while only ew NPL s udies ocus on he Sou h Asian Associa ion o Regional
Coope a ion (SAARC) and O ganiza ion o Economic Coope a ion and De elopmen
(OECD) coun ies. This inding indica es ha mo e NPL esea ch is needed o SAARC and
OECD coun ies and o he Asia–Paci ic, No h Ame ica, La in Ame ica and Ca ibbean
egions.
3.2 Coun ies wi h he mos NPL esea ch
I is impo an o iden i y coun ies wi h he highes numbe o NPL esea ch s udies.
Obse a ion om Google Schola sea ch esul s – om he i s page o he i een h page o
he sea ch esul s – show ha he e a e mo e single-coun y NPL esea ch s udies ocusing on
China, Malaysia, Indonesia, and Kenya. In con as , ew NPL esea ch s udies ocus on
coun ies like India, E hiopia, Zimbabwe, B azil, Uni ed A ab Emi a es (UAE), and Saudi
A abia. This inding indica es ha mo e NPL s udies a e needed ha ocus on India, E hiopia,
Zimbabwe, B azil, UAE, and Saudi A abia (See Figu e 2).
3.3 Top esea ch a eas/ hemes
I is also impo an o iden i y he op esea ch a eas o esea ch hemes in he ecen empi ical
li e a u e (see Table 2). The opmos esea ch a eas a e “ he de e minan s o NPL”, “ he impac
o bank NPL on p o i abili y”, “ he beha io o NPL du ing he COVID-19 pandemic”, and
“NPL as an indica o o bank isk and c edi isk”. Howe e , s udies ha conduc li e a u e
e iew on NPL a e e y scan in he ecen li e a u e. This indica es ha mo e li e a u e e iew
s udies a e needed in he li e a u e.
0
50
100
150
200
250
300
350
400
2020 2021 2022 2023 Mid-2024
251
244
312
367
159
Numbe
Yea
Figu e 1. To al numbe o esea ch a icles on NPL. Sou ce: Google Schola (2020 o mid-2024)
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3.4 Common heo ies used in he ecen NPL li e a u e
Se e al s udies in he ecen NPL li e a u e use a numbe o heo ies o hypo heses o explain
he beha io o NPL. The heo ies used in he ecen NPL li e a u e include agency heo y,
mo al haza d heo y, s akeholde heo y, inancial in e media ion heo y, in o ma ion
asymme y heo y, ma ke powe heo y, capi al bu e heo y, liquidi y p e e ence heo y,
Table 1. Numbe o egional NPL s udies
Regions and egional blocs #
Eu ope 34
A ica 24
Asia 16
Asia–Paci ic 4
No h Ame ica 2
La in Ame ica and Ca ibbean 1
B azil, Russia, India, China, and Sou h A ica (BRICS) coun ies 11
Middle Eas and No h A ica (MENA) coun ies 10
Associa ion o Sou heas Asian Na ions (ASEANs) coun ies 10
Gul Coope a ion Council (GCC) coun ies 6
Sou h Asian Associa ion o Regional Coope a ion (SAARC) coun ies 5
O ganiza ion o Economic Coope a ion and De elopmen (OECD) coun ies 2
No e(s): Ou pu is gene a ed om he manual coun o he sea ch esul om Google Schola om 2020 o
mid-2024
Sou ce(s): Google Schola ( om 2020 o mid-2024)
02468 10 12
Kenya
Indonesia
Malaysia
China
Nige ia
Tanzania
Vie nam
I aly
Tu key
India
Sou h A ica
Bangladesh
Ghana
Bosnia and He zego ina
Namibia
E hiopia
Zimbabwe
B azil
Uni edA ab Emi a es
Saudi A abia
Numbe o a �cles
Coun ies
Figu e 2. Numbe o single-coun y NPL esea ch a icles. Sou ce: Google Schola (2020 o mid-2024)
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loan p icing heo y, and ade-o heo y (see Table 3). The mos common heo ies used by
NPL schola s a e he agency heo y, s akeholde heo y, he in o ma ion asymme y heo y and
he mo al haza d heo y. Among hese h ee heo ies, he mo al haza d heo y and agency
heo y ha e p o en o be he mos e ec i e in explaining he beha io o NPL because he wo
heo ies a gue ha he lack o moni o ing o bo owe s is a po en ial cause o ising non-
pe o ming loans. I bo owe s a e cons an ly moni o ed, lende s will be able o p e en
bo owe s om engaging in ac i i ies, o aking ac ions, ha impai hei abili y o epay loans.
Also, he heo ies ha ha e been newly applied o NPL esea ch include he ma ke powe
heo y, capi al bu e heo y, liquidi y p e e ence heo y, loan p icing heo y, and ade-o
heo y. These heo ies ha e been newly applied o NPL esea ch because o he g owing in e -
disciplina y na u e o NPL esea ch and he need o use heo ies om he economics discipline
o explain he beha io o NPL.
Table 2. Top esea ch a eas/ hemes in he ecen NPL Li e a u e
Rank Resea ch a eas/Themes
Numbe o
a icles
1s De e minan s o NPL/Fac o s a ec ing NPL 112
2nd Impac o NPL on bank p o i abili y 56
3 d Beha io o NPL du ing he COVID-19 pandemic 45
4 h NPL as an indica o o bank isk and c edi isk 35
5 h NPL and inancial s abili y 32
6 h NPL and bank lending 21
7 h NPL and inancial/banking c isis 19
8 h Li e a u e e iew on NPL 9
Sou ce(s): Google Schola (cu a ed on 17/06/2024); Google Schola ( om 2020 o mid-2024)
Table 3. Common heo ies used in he ecen NPL li e a u e
Rank Theo y S udies ha ha e used he heo y o explain NPL
1 Agency heo y Ngungu and Abdul (2020), Owonye and Obono iem o (2022), Kim Quoc
T ung (2022), Ta chouna e al. (2022), Wenge ek e al. (2022)
2 Mo al haza d hypo hesis/
heo y
Mohamad and Jenkins (2021), Lee e al. (2020), Cicchiello e al. (2022)
3 S akeholde heo y Kim Quoc T ung (2022), Liu e al. (2023), Iqbal and Nosheen (2023)
4 In o ma ion asymme y
heo y
Owonye and Obono iem o (2022), Do e al. (2020), Ola ewaju (2020),
Pa k and Shin (2021)
5 Financial in e media ion
heo y
Owonye and Obono iem o (2022), Alnabulsi e al. (2023a)
6 Ma ke powe heo y Ngungu and Abdul (2020)
7 Capi al bu e heo y Ngungu and Abdul (2020)
8 Liquidi y p e e ence
heo y
Ngungu and Abdul (2020)
9 Loan p icing heo y Owonye and Obono iem o (2022)
10 T ade-o heo y Duong e al. (2023)
11 Di e si ica ion heo y Duong e al. (2023)
12 Pecking O de heo y Duong e al. (2023)
13 Mode n po olio heo y Do e al. (2020)
14 Cha e alue heo y Cicchiello e al. (2022)
Sou ce(s): Google Schola ( om 2020 o mid-2024)
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3.5 Jou nals wi h he highes single-s udy ci a ion
I is also impo an o ecognize he jou nals in which he mos -ci ed a icles ha e been
published in, as hese jou nals end o ha e a wide eade ship. Table 4 shows ha h ee
jou nals ha e o e 100 ci a ions since 2020 namely he “Asian Jou nal o Accoun ing
Resea ch”, “Jou nal o Banking and Finance”, and “Finance Resea ch Le e s”. These
jou nals a e high-impac jou nals ha publish schola ly esea ch on NPL. The “Asian Jou nal
o Accoun ing Resea ch” anks i s among he jou nals lis ed in Table 4.
4. Thema ic e iew o he ecen NPL li e a u e
This sec ion p esen s he dominan hemes in he ecen NPL li e a u e which a e he bank-
speci ic de e minan s o NPL, ex e nal de e minan s o NPL, e ec o NPL on bank lending,
e ec o NPL on bank pe o mance, e ec o NPL on inancial s abili y and he e ec o NPL
on he wide economy. The summa y is p esen ed in Table 5.
4.1 Bank-speci ic de e minan s o NPL
The ecen empi ical li e a u e iden i ies se e al bank-speci ic de e minan s o NPL which can
be di ided in o bank-speci ic “ inancial” de e minan s o NPL and he bank-speci ic “non-
inancial” de e minan s o NPL. The iden i ied bank-speci ic “ inancial” de e minan s o NPL
include loan g ow h, ne in e es ma gin, loan loss p o ision, bank di e si ica ion, ope a ing
e iciency, bank size, bank p o i , in e es a e (Ahmed e al., 2021); income di e si ica ion
(Ciukaj and Kil, 2020; Khan e al., 2020; Ris i�
c and Jemo i�
c, 2021); capi al adequacy a io
(K yzanowski e al., 2023; Panco o e al., 2024); ope a ing cos (Nguyen, 2024); e u n on
equi y (E das and Ezanoglu, 2022); e u n on asse (Kjose ski and Pe ko ski, 2021); liquidi y
a io (Msomi, 2022), and bank business model (Fa n�
e and Vouldis, 2024). The iden i ied bank-
speci ic “non- inancial” de e minan o NPL in he ecen empi ical li e a u e is co po a e
go e nance (Ta chouna e al., 2022).
Table 4. Jou nals wi h he highes single-s udy ci a ion
Jou nals
Top
ci a ions (as
a 17 h June
2024)
Scopus qua ile
anking (as o
June 2024) The a icle
Asian Jou nal o Accoun ing Resea ch 234 Q2 Khan e al. (2020)
Finance Resea ch Le e s 132 Q1 Ka adima and Lou i (2021)
Jou nal o Banking and Finance 109 Q1 A i e al. (2021)
Jou nal o Asian Finance, Economics and
Business
97 Nil Singh e al. (2021)
In e na ional Jou nal o Fo ecas ing 91 Q1 Bello i e al. (2021)
Jou nal o Risk and Financial Managemen 76 Q1 Ahmed e al. (2021)
No h Ame ican Jou nal o Economics and
Finance
73 Q1 Se ano (2021)
Jou nal o Economic S udies 64 Q1 S aeh and Uusk€
ula (2021)
In e na ional Re iew o Financial Analysis 53 Q1 Ka adima and Lou i (2020)
Jou nal o Cen al Banking Theo y and
P ac ice
51 Q2 �
Zuni�
c e al. (2021)
No e(s): The ci a ion coun s a e ob ained om Google Schola while he qua ile anking a e ob ained om
Scopus da abase as a June 2024
Sou ce(s): Google Schola (2020 o mid-2024)
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4.2 Ex e nal de e minan s o NPL
The ecen empi ical li e a u e also iden i ies se e al ex e nal de e minan s o NPL which can
be di ided in o mac o “economic” de e minan s o NPL and he mac o “non-economic”
de e minan s o NPL. The iden i ied mac o “economic” de e minan s o NPL include
exchange a e (Na han e al., 2020; Ahmed e al., 2021); economic g ow h (Nguyen, 2024);
g oss domes ic p oduc (GDP) (E das and Ezanoglu, 2022); he lending a e o in e es a e in
he economy (Na han e al., 2020); in la ion a e (Msomi, 2022); unemploymen a e (Ris i�
c
and Jemo i�
c, 2021); he economic en i onmen and loose inancing condi ions (Gamba-
San ama ia e al., 2024); public deb (Foglia, 2022); economic policy unce ain y (EPU)
(Ka adima and Lou i, 2021; Ozili, 2022b); cu en accoun balance, eal house p ices (S aeh
and Uusk€
ula, 2021); so e eign deb and money supply (Ani a e al., 2022). The iden i ied
mac o “non-economic” de e minan s o NPL include poli ical isk (Ahmed e al., 2021);
in ech inpu s (Wang e al., 2023); he sys emic isk s a us o he bank (Ozili, 2020); he
Table 5. Summa y o he hema ic e iew o he ecen NPL li e a u e
S/
N Majo hemes Findings in he heme S udies
1 Bank-speci ic
de e minan s o
NPL
Loan g ow h; ne in e es ma gin; loan
loss p o ision; bank di e si ica ion;
ope a ing e iciency; bank size; bank
p o i ; in e es a e; capi al adequacy
a io; e u n on equi y; e u n on asse ;
liquidi y a io; bank business model;
co po a e go e nance
Ahmed e al. (2021), Ciukaj and Kil
(2020), Khan e al. (2020), Ris i�
c and
Jemo i�
c (2021), K yzanowski e al.
(2023), Panco o e al. (2024), Nguyen
(2024), E das and Ezanoglu (2022),
Ta chouna e al. (2022), Fa n�
e and
Vouldis (2024), Msomi (2022),
Kjose ski and Pe ko ski (2021)
2 Ex e nal
de e minan s o
NPL
Exchange a e; economic g ow h; GDP;
he lending a e; in la ion a e;
unemploymen a e; he economic
en i onmen ; loose inancial condi ions;
public deb ; economic policy
unce ain y; cu en accoun balance;
eal house p ices; so e eign deb ; money
supply; poli ical isk; in ech inpu s; he
sys emic isk s a us o he bank; he
COVID-19 pandemic; he independence
and anspa ency o he cen al bank; he
in ech e a; he size o shadow banking
ac i i y; inancial inclusion; coun y
isks; go e nmen al ine ec i eness; and
egula o y quali y
Na han e al. (2020), Nguyen (2024),
E das and Ezanoglu (2022), Msomi
(2022), Ris i�
c and Jemo i�
c (2021),
Gamba-San ama ia e al. (2024),
Foglia (2022), Ka adima and Lou i
(2021), S aeh and Uusk€
ula (2021)
Ani a e al. (2022), K yzanowski e al.
(2023), Wang e al. (2023), Mamoon
e al. (2025), Isaye and Fa ooq
(2024), Ozili and Adamu (2021),
Ahiase e al. (2024), Ozili (2020)
3 E ec o NPL on
bank lending
High NPL dec eases bank lending. I
dec eases lending o he eal economy
a e he global inancial c isis
T€
ol€
o and Vi �
en (2021), Gjeçi e al.
(2023), Se ano (2021), Ahmed e al.
(2024)
4 E ec o NPL on
bank pe o mance
High NPL dec eases he e u n on equi y,
he p o i abili y o inancial pe o mance
o banks. I also dec eases bank
e iciency
Law ence e al. (2024), Kuma i e al.
(2024), Iqbal and Saeed (2023), Duong
e al. (2023), Phung e al. (2022)
5 E ec o NPL on
inancial s abili y
High NPL inc eases inancial ins abili y,
inancial dis ess and i leads o highe
loan loss p o isions
Kulu and Osei (2024), Sain and
Kashi amka (2023), Alnabulsi e al.
(2023b), El e gani e al. (2024)
6 E ec o NPL on
he wide economy
High NPL leads o a dec ease in o eign
di ec in es men in low, decline in eal
GDP g ow h, low le els o inancial
inclusion
Alam e al. (2024), Huljak e al.
(2022), Zhang e al. (2022)
Sou ce(s): Summa y o au ho ’s egional e iew o li e a u e
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examines he co ela ion o EPU and bank NPL om 2008 o 2017 and inds ha EPU is
nega i ely co ela ed wi h bank NPL in G7 coun ies. Saliba e al. (2023) ocus on he BRICS
coun ies. They in es iga e he impac o coun y isks on banking sec o NPL in B azil,
Russia, India, China, and Sou h A ica (BRICS) coun ies. They assess whe he coun y-
speci ic isks a ec bank NPL du ing he 2004 o 2020 pe iod and using he quan ile es ima ion
me hod. They ind ha highe coun y isks inc ease bank NPL in BRICS coun ies. Kuma
e al. (2023) ocus on he GCC coun ies. They in es iga e he de e minan s o bank NPL in
GCC coun ies om 2000 o 2018. They analyze he da a o 53 con en ional banks using he
sys em GMM eg ession me hod and ind ha high non-oil eal GDP g ow h a e and high
in la ion inc ease NPL while ele a ed le els o domes ic p i a e c edi and a high ola ili y
index lowe he size o NPL.
In summa y, e idence om o he egions shows ha he de e minan s o bank NPL a e
mos ly bank-speci ic and mac o ac o s such as e u n on equi y, c edi g ow h, c edi cos s,
EPU, coun y isks, non-oil eal GDP g ow h a e, in la ion, domes ic p i a e c edi and he
ola ili y index. Meanwhile, he de e minan s which a e common among he empi ical s udies
e iewed in his sec ion a e GDP and GDP g ow h.
5.6 Single coun y s udies
Single coun y s udies a e impo an because he indings om such s udies o en ake in o
accoun he peculia cha ac e is ics o each coun y and he unique economic ac o s ha a e
p e ailing in he coun y which may a ec bank NPL. Many single coun y s udies ha e
eme ged since 2020. Fo ins ance, in he case o he Uni ed S a es, Ta chouna e al. (2022)
examine he impac o banks’ co po a e go e nance on NPL. They examine 184 US
comme cial banks om 2000 o 2013 and using he dynamic panel GMM es ima ion. They
ind ha small banks wi h weak co po a e go e nance sys ems ha e high NPL. In he case o
China, Wang e al. (2023) examine whe he in ech inpu s a e a de e minan o bank NPL.
They analyze 432 b anches o he comme cial banks in he ci y o Beijing in China om 2005
o 2022. The in ech inpu s used in hei s udy a e he pe sonnel inpu s, so wa e inpu s, and
ha dwa e inpu s which a e used in banking ope a ions. They ind ha in ech inpu s dec ease
he le el o NPL, bu he in ech inpu s ha e a lag e ec in educing he size o NPL. In a ela ed
s udy, K yzanowski e al. (2023) examine he e ec o he COVID-19 pandemic on he NPL o
Chinese banks. They ind ha he COVID-19 pandemic inc eases bank NPL while well-
capi alized banks a e mo e e ec i e in con olling hei NPL a io du ing he pandemic.
Fu he mo e, in Vie nam, Nguyen (2024) analyzes he de e minan s o NPL in Vie namese
banks om 2005 o 2020. They show ha bank p o i s, bank size and economic g ow h
dec ease NPL while ope a ing cos and loan loss p o isions inc ease NPL. In ano he ela ed
s udy, T ung (2024) in es iga e he impac o he COVID-19 pandemic on bank NPL in
Vie nam om 2011 o 2021. They ind ha he COVID-19 pandemic inc eases he NPL o
Vie namese banks. In he case o Pakis an, Khan e al. (2020) ocus on he de e minan s o
bank NPL in Pakis an om 2005 o 2017. They analyze lis ed comme cial banks using ixed
and andom e ec s panel eg ession me hods. They ind ha ope a ing e iciency and
p o i abili y ha e a signi ican nega i e e ec on NPL, while capi al adequacy and income
di e si ica ion ha e a nega i e e ec on NPL. In a ela ed s udy, Ahmed e al. (2021) examine
he mac oeconomic and bank-speci ic de e minan s o NPL in Pakis an om 2008 o 2018
using he sys em GMM es ima o . They ind ha c edi g ow h, ne in e es ma gin, loan loss
p o isions, ope a ing e iciency, bank size, and GDP g ow h a e de e minan s o NPL. In he
case o I aly, Foglia (2022) in es iga e he mac oeconomic de e minan s o NPL in I aly om
2008Q3 o 2020Q4 using he au o eg essi e dis ibu ed lag (ARDL) coin eg a ion model. The
au ho inds ha GDP, public deb , unemploymen a e and domes ic c edi a e de e minan s o
he NPL o I alian banks. In a ela ed s udy, Panco o e al. (2024) in es iga e he de e minan s
o NPL in he I alian banking sec o om 2011 o 2017 and using dynamic panel da a me hods.
They ind ha well-capi alized banks ha e ewe NPL.
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In he con ex o Uganda, Na han e al. (2020) examine he de e minan s o NPL in
Uganda’s comme cial banks using qua e ly da a o he pe iod 2002Q1 o 2017Q2 and using
ARDL and bounds es echniques. They ind ha a highe lending a e, eal e ec i e exchange
a e and unemploymen a e lead o highe NPL while highe e u n on asse and GDP g ow h
a e dec ease NPL. In he case o Se bia, Ris i�
c and Jemo i�
c (2021) analyze he NPL
de e minan s in Se bia om 2010–2019 and using a ec o au o eg essi e model. They show
ha GDP, in la ion, unemploymen , e u n on asse s, cos e iciency, capi al adequacy a io and
income di e si ica ion a e signi ican de e minan s o NPL. In he case o Colombia, Gamba-
San ama ia e al. (2024) examine he de e minan s o NPL in Colombia. They ind ha a
a o able economic en i onmen and loose inancial condi ions dec ease he size o NPL in
Colombian banks.
�
Zuni�
c e al. (2021) examine he case o Bosnia and He zego ina.
�
Zuni�
c
e al. (2021) examine he de e minan s o bank NPL and he e ec o he COVID-19 pandemic
on bank NPL in Bosnia and He zego ina, a e con olling o GDP and loan loss p o isions
om 2012 o 2020. The au ho s use he linea ime se ies mul iple eg ession me hod and show
ha GDP g ow h has a posi i e impac on NPL while he COVID-19 pandemic has a nega i e
impac on NPL.
Finally, despi e he peculia i ies o each coun y e iewed in his sec ion, i can be seen ha
some coun ies epo simila de e minan s o NPL despi e each coun y being di e en . The
common de e minan s o NPL a e GDP g ow h, COVID-19 pandemic, unemploymen , in la ion,
GDP, ope a ing e iciency, in e es a e, bank size, bank p o i and capi al adequacy a io.
5.7 C oss-coun y o in e na ional NPL esea ch
C oss-coun y s udies a e also impo an because he indings om such s udies can e eal he
common ac o s ac oss coun ies ha a ec NPL. Many c oss-coun y s udies ha e eme ged
since 2020. Fo ins ance, Mamoon e al. (2025) in es iga e whe he cen al bank independence
and anspa ency a e de e minan s o bank NPL using da a om 39 coun ies. They ind ha
independen cen al banks expe ience ewe NPL in he banking indus y. They also ind ha
anspa en cen al banks wi h a lowe deg ee o in o ma ion symme y expe ience ewe NPL.
Ozili (2022a) in es iga e he beha io o bank NPL in he in ech e a. The s udy analyses 35
de eloped coun ies om 1998 o 2016 and show ha NPL is ewe in he in ech e a. I was
also ound ha coun ies wi h high domes ic p i a e c edi ha e highe NPL in he in ech e a.
Ka adima and Lou i (2021) a gue ha EPU migh ini ia e and p opaga e NPL. To alida e
hei a gumen , hey examine whe he EPU has a signi ican e ec on NPL. They examine 507
banks om ou coun ies: F ance, Ge many, I aly, and Spain om 2005 o 2017. They ind
ha EPU has a posi i e impac on NPL, bu he posi i e impac is mode a ed by highe bank
concen a ion. Ozili and Adamu (2021) examine whe he inancial inclusion is a de e minan
o bank NPL using da a om 48 coun ies. They use he ixed e ec panel eg ession me hod
and ind ha g ea e inancial inclusion, in e ms o o mal accoun owne ship, leads o highe
NPL. Isaye and Fa ooq (2024) examine he impac o shadow banking ac i i y on NPL in
lis ed banks in 27 coun ies om 2002 o 2020. They ind ha banks headqua e ed in coun ies
wi h high shadow banking ac i i y ha e ewe NPL.
Kjose ski and Pe ko ski (2021) examine he mac oeconomic and bank-speci ic
de e minan s o NPL ocusing on 21 comme cial banks om h ee Bal ics S a es namely
Es onia, La ia and Li huania om 2005 o 2016. They use he GMM eg ession me hod and
ind ha mac oeconomic ac o s such as GDP g ow h, public deb , in la ion, and
unemploymen ha e a signi ican e ec on NPL while bank-speci ic ac o s such as equi y
o o al asse s a io, e u n on asse s, e u n on equi y, and loan g ow h ha e a signi ican e ec
on NPL. Ozili (2020) analyses how he s a e o he economy a ec s he NPL o Eu opean
global sys emically impo an banks compa ed o he Eu opean global non-sys emically
impo an banks om 2004 o 2013. The au ho uses he panel eg ession me hod o analyze
he link be ween NPL and GDP g ow h and ind ha global sys emically impo an banks ha e
ewe NPL du ing economic booms and du ing pe iods o inc eased lending, while global non-
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sys emically impo an banks expe ience highe NPL du ing pe iods o inc eased lending.
Ka ika e al. (2022) examine he e ec o co po a e go e nance on bank NPL. They analyze
440 banks in eme ging ma ke coun ies using Bloombe g da a om 2016 o 2020. They use
pa ial leas squa es eg ession me hod o analyze he da a and ind ha inancial pe o mance
is a mo e signi ican de e minan o NPL han bank co po a e go e nance indica o s. Adusei
and Adeleye (2022) examine he e ec o c edi in o ma ion sha ing and c edi o igh s
p o ec ion on bank NPL in 132 coun ies. They ind ha , in he p esence o c edi o igh s
p o ec ion, he posi i e impac o c edi in o ma ion sha ing on NPL is highe . Also, c edi o
igh s p o ec ion educes NPL in he p esence o c edi in o ma ion sha ing. Finally, he
common de e minan o NPL among he c oss-coun y s udies e iewed in his sec ion is EPU.
6. Me hodological ad ances and issues in NPL esea ch
Quan i a i e esea ch me hods a e mos ly used in he ecen empi ical li e a u e while
quali a i e me hods a e used spa ingly.
6.1 Common baseline model used in he ecen li e a u e
The common baseline model adop ed in mos quan i a i e NPL s udies is he mul i- ac o
linea model which exp esses NPL as a unc ion o i s de e minan s, whe e he NPL a io is he
dependen a iable while i s de e minan s a e he independen a iables (see Ka adima and
Lou i, 2021; Phung e al., 2022; Ani a e al., 2022). Depending on he objec i e o he
esea che , he NPL model may be exp essed as a unc ion o he bank-speci ic de e minan s o
NPL, o he ex e nal de e minan s o NPL o a combina ion o bo h he bank-speci ic and
ex e nal de e minan s o NPL. The common in e nal and ex e nal de e minan s o NPL used in
he ecen li e a u e a e highligh ed in sec ions 4.1 and 4.2.
6.2 Common es ima ion me hod used in he ecen li e a u e
The common es ima ion me hod used in he ecen empi ical li e a u e is he panel eg ession
es ima ion me hod while he use o ime se ies eg ession is less common (see T€
ol€
o and Vi �
en,
2021; Ka adima and Lou i, 2021;
�
Zuni�
c e al., 2021; Phung e al., 2022; Ani a e al., 2022).
When using he panel eg ession me hod, esea che s o en make econome ic adjus men s o
he a iables in he model by adding ixed e ec s, andom e ec s, obus s anda d e o s, i s -
di e ence, lagged NPL a iable and o he econome ic adjus men s ha achie e he modelling
objec i e o he esea che (see, o example, Khan e al., 2020; He nawa i e al., 2021; Ozili
and Adamu, 2021; T€
ol€
o and Vi �
en, 2021; Ka adima and Lou i, 2021; Phung e al., 2022; Ani a
e al., 2022). A majo ad ancemen in he ecen empi ical NPL li e a u e is he equen use o
obus me hodologies. These me hodologies include quan ile eg ession, wo-way sys em
GMM eg ession me hod, and he ARDL coin eg a ion model, among o he s (see Table 7).
These me hodologies a e p e e ed in NPL esea ch because hey a e e ec i e in add essing
simul anei y bias, endogenei y p oblems, omission bias and collinea i y p oblems in he
da ase . Ano he no able ad ancemen in he li e a u e is he con inuous disco e y o new non-
adi ional de e minan s o NPL such as digi al inancial inclusion, co up ion, shadow
banking, ola ili y index, in ech inpu s and he le el o sus ainable de elopmen , among
o he s (see, o example, Mohamad and Jenkins, 2021; Hakimi e al., 2022; Wang e al., 2023;
Ozili, 2024; Kuma e al., 2023; Isaye and Fa ooq, 2024). These disco e ies a e helping o
inc ease knowledge o he di e se ac o s ha a ec NPL, and hey a e also helping o educe
he size o he e o e m o NPL models by inco po a ing new p edic o s in o NPL models.
6.3 Common sample pe iod analysis and sou ce o NPL da a
In e ms o he sample pe iod co e ed in he ecen empi ical li e a u e, many s udies examine
he pos - inancial c isis pe iod (e.g. Ciukaj and Kil, 2020; Se ano, 2021; T€
ol€
o and Vi �
en,
2021; Mohamad and Jenkins, 2021; Alaoui Mdagh i, 2022; Asemo a e al., 2023; Chinoda and
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Kapingu a, 2023; Ali e al., 2023; Zeqi aj e al., 2024). O he s udies compa e he pos -c isis
pe iod wi h he p e-c isis pe iod (e.g. No e al., 2021; Hakimi e al., 2022; Alnabulsi e al.,
2022; Huljak e al., 2022). Few s udies compa e he global inancial c isis pe iod wi h he
COVID-19 pandemic pe iod (Alnabulsi e al., 2022), while o he s udies ocus on he COVID-
19 pandemic pe iod alone (Pa k and Shin, 2021; Ape gis, 2022). Rega ding he sou ce o NPL
da a, he e a e nume ous da abase ha o e open-access and closed-access in o ma ion on
bank-le el NPL and indus y (o coun y-le el) NPL. They include BankFocus da abase
( o me ly, Bankscope da abase), Compus a , S a is a, he Wo ld Bank’s Global Financial
De elopmen Indica o s, cen al bank websi e, banks’ inancial s a emen s, Da as eam and
Thomson One Banke .
6.4 Va iable measu emen issues
Tu ning o he me hodological issues in he ecen empi ical li e a u e, a majo me hodological
issue is he obse ed a ia ion in he measu emen o NPL – he dependen a iable. Some
s udies use he ac ual NPL amoun (wi hou a de la o ) as he dependen a iable (
�
Zuni�
c e al.,
2021). O he s udies use he NPLs o o al loans a io (see, o example, Kjose ski and
Pe ko ski, 2021; Chun and A daa agchaa, 2024). Ano he issue is he lack o uni e sal
consensus on wha he de la o o he NPL a io should be. Some s udies use o al loans as he
de la o which yields he NPLs o o al loans a io (e.g. Kjose ski and Pe ko ski, 2021; Chun
and A daa agchaa, 2024). O he s udies use lagged o al loans as he de la o which yields he
NPLs o lagged o al loans a io (Chen e al., 2021). Some s udies use o al asse s as he de la o
which yields he NPLs o o al asse s a io (L�
opez-Espinosa e al., 2021). These a ia ions in
he NPL a io de la o make compa ison o he esul s o NPL esea ch di icul .
7. A eas o u u e esea ch
Mo e NPL esea ch is needed om Paci ic coun ies, La in Ame ica and Ca ibbean coun ies.
P esen ly, only a ew s udies examine he de e minan s o NPL in Paci ic coun ies, La in
Table 7. Common me hodologies used in he ecen empi ical NPL li e a u e
Common me hodologies S udies
1 Panel leas squa es eg ession Se ano (2021), Ciukaj and Kil (2020), El-Chaa ani e al.
(2023a, b)
2 Quan ile eg ession Se ano (2021), Saliba e al. (2023)
3 Time se ies linea mul iple eg ession �
Zuni�
c e al. (2021)
4 Panel OLS eg ession wi h ixed and
andom e ec s
T€
ol€
o and Vi �
en (2021), Khan e al. (2020), Ka adima and Lou i
(2021), Phung e al. (2022), Ani a e al. (2022), Ozili and
Adamu (2021), He nawa i e al. (2021)
5 Sys em and dynamic GMM eg ession
me hod
Ahmed e al. (2021), Hakimi e al. (2024), No e al. (2021),
Adesina and Mwamba (2021), Ola ewaju (2020)
6 Au o eg essi e dis ibu ed lag
(ARDL) coin eg a ion model
Foglia (2022), Kalu e al. (2021)
7 Dynamic panel eg ession Wang e al. (2023), Vi hesson hi (2023)
8 panel Bayesian VAR model Huljak e al. (2022)
9 S uc u al equa ion modeling based on
pa ial leas squa es
Ka ika e al. (2022)
10 Pea son co ela ion Ozili (2024)
11 Quali a i e me hods T ung (2024)
12 Seemingly un ela ed eg essions
es ima o
Ali e al. (2023)
13 Two-s age leas squa es eg ession Adu (2022)
Sou ce(s): Google Schola (2020-mid-2024)
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Ame ica, and Ca ibbean coun ies. These coun ies ha e he lowes numbe o published
empi ical NPL esea ch. De e mining he ac o s ha a ec NPL in hese coun ies is
impo an because i can help o compa e he indings o such s udies wi h he indings om
A ican coun ies o de e mine he simila i ies o di e ences in NPL de e minan s, and which
could lead o u he compa a i e esea ch in he NPL li e a u e. The e o e, u u e esea ch
s udies should in es iga e he de e minan s o NPL in Paci ic coun ies, La in Ame ica, and
Ca ibbean coun ies.
Two, quali a i e s udies on NPL a e sca ce in he li e a u e. The e is a need o mo e
quali a i e s udies on NPL. Resea che s should use in e iews, ques ionnai es, o su eys o
elici he opinions o bank manage s and c edi isk o e s on he causes and consequences o
NPL. The esponse da a gene a ed om he in e iews, ques ionnai es o su eys o bank
manage s and c edi isk o ice s can o e new insigh s ha canno be gained om using
seconda y da a o quan i a i e esea ch me hods. The e o e, u u e esea ch s udies should
unde ake mo e quali a i e esea ch when in es iga ing he de e minan s and consequences
o NPL.
Th ee, mo e esea ch is needed on he signaling e ec o NPL. Rising NPL may signal poo
managemen o bank loan po olio o bank owne s. I may also signal he e ec o an
un a o able economic condi ion on banks’ lending ac i i ies. I may also signal o he hings
such as a weak loan eco e y sys em. NPL may ha e o he signaling e ec s which emain
unknown and unexplo ed in he li e a u e. The e o e, u u e esea ch should p o ide new
insigh s ha imp o e ou unde s anding o he nume ous signaling e ec s o NPL.
Fou , addi ional esea ch is needed on he e ec o cul u al ac o s and eligiosi y on NPL.
Cul u al ac o s and eligiosi y may in luence bo owe s’ willingness o epay he loans owed
o inancial ins i u ions. The ecen NPL li e a u e is silen abou he ole o cul u al ac o s and
eligiosi y in in luencing he size o bank NPL. Fu u e esea ch s udies should examine
whe he cul u al ac o s and eligiosi y a e po en ial de e minan s o NPL.
Fi e, he e is a need o examine he e ec o loan epaymen digi al echnologies on NPL.
The e a e exis ing digi al echnologies, such as mobile banking applica ions, ha assis e ail
and co po a e bo owe s in epaying hei loans emo ely and quickly, he eby educing he
isk o loan de aul and dec easing he le el o NPLs. The exis ing li e a u e has no conside ed
he ole o such digi al echnologies in educing he NPL. The e o e, u u e s udies should
conside loan epaymen digi al echnologies as po en ial de e minan s o NPL.
Six, he e is a need o conside he impac o he egula o y/supe iso y s yle o he bank
egula o /supe iso on bank NPL. This is impo an because comme cial banks will do all i
akes o minimize NPL i hey unde s and ha he bank egula o /supe iso is adop ing a
egula o y/supe iso y s yle ha signals o he banking indus y ha he egula o /supe iso is
willing o allow a bank o ail i he bank is in se e e dis ess and wi hou a gua an ee o cen al
bank bailou . Such egula o y/supe iso y inclina ion o s yle will incen i ize banks o
inc ease hei e o o mi iga e NPL. Fu u e s udies should es his hypo hesis using
empi ical da a.
Se en, he e is a need o con inuously e alua e he impac o egula ion on bank NPL. Fo
example, he Basel Commi ee on Banking Supe ision implemen ed a egula ion in 2023 ha
equi e NPL secu i iza ion exposu es o be subjec o 100% isk weigh o highe , excep o
posi ions isk-weigh ed using ex e nal a ings-based app oach. This egula ion can inc ease
he incidence o NPL in banks. The e o e, u u e s udies should in es iga e he impac o such
egula o y changes on bank NPL o o e insigh in o how new egula ion may a ec bank NPL
and i s implica ion o inancial s abili y.
8. Conclusion
This li e a u e e iew a icle examined he ecen esea ch in o bank NPLs. I iden i ied he
majo hemes in he li e a u e including he ecen de e minan s o NPL and i s e ec s ac oss
di e en egions o he wo ld while also p o e ing some sugges ions o u u e esea ch.
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The indings o he e iew e ealed ha ecen NPL s udies ha e made signi ican p og ess
in examining he in e ac ion be ween NPL and a wide ange o ac o s such as bank-speci ic
ac o s, mac oeconomic ac o s, coun y-le el ac o s, and some consequences o NPL. The
newly iden i ied de e minan s o NPL in he ecen li e a u e a e co po a e go e nance,
in ech, inancial inclusion, coun y isks, egula o y quali y, poli ical isks, shadow banking
ac i i y, he COVID-19 pandemic, public/ex e nal deb , eal house p ices, and he
independence o he cen al bank. The common egional de e minan s o NPL in he ecen
li e a u e a e co up ion, GDP, deb , loan g ow h, in la ion, capi al adequacy a io, lending
a e, compe i ion, he egula o y en i onmen , and GDP g ow h (see Figu e 3).
The indings also showed ha mo e NPL esea ch is needed om SAARC and OECD
coun ies, and om he Asia–Paci ic, No h Ame ica, La in Ame ica and Ca ibbean egions. I
was also shown ha ewe NPL esea ch has been conduc ed on India, E hiopia, Zimbabwe,
B azil, he UAE, and Saudi A abia. The common heo ies used by NPL schola s a e he agency
heo y, s akeholde heo y, he in o ma ion asymme y heo y, and he mo al haza d heo y
while he common me hodologies used a e he panel eg ession and sys em GMM eg ession
me hods.
The indings o his e iew ha e se e al implica ions. One, he empi ical e idence
p esen ed in his s udy can poin policymake s o he a eas whe e hey need o pay mo e
a en ion o, o con ol he le el o NPL in he banking indus y and p ese e bank s abili y.
Two, i p o ides schola s wi h new empi ical insigh s in o wha is known and wha is no
known so ha schola s can ocus hei esea ch e o s on he mos impo an hemes in NPL
esea ch. Th ee, while exis ing heo ies may no explain he new de e minan s o NPL, he e
may be a need o new heo ies ha explain he new eme ging de e minan s o NPL
pa icula ly he linkages be ween NPL and echnological ac o s such as in ech. Fou , he
e idence p esen ed on he consequences o NPL can assis bank manage s and policymake s in
unde s anding he consequences o NPL o inancial/banking s abili y and in unde s anding
he ype o sa egua ds o pu in place o minimize he ad e se e ec s o non-pe o ming loans.
A limi a ion o he s udy is ha he s udy did no e iew he s udies ha we e published p io
o 2020. The e iew only ocused on s udies published om 2020 o 2024. Ano he limi a ion
o he s udy is ha i elied on a single sea ch pla o m which is Google Schola . The s udy did
no use al e na i e sea ch pla o ms which may iden i y addi ional a icles ha may o e new
insigh s o en ich he e iew.
Se e al di ec ions o u u e esea ch we e sugges ed such as he need o conduc mo e
quali a i e NPL esea ch, he need o in es iga e he signaling e ec s o NPL, he need o
Figu e 3. Summa y o e iew esul s. Sou ce: Au ho
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explo e he e ec o cul u al ac o s and eligiosi y on NPL, he ole o loan epaymen digi al
echnologies in educing he incidence o NPL, and he impac o egula ion on bank NPL.
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