STABILITY OF THE BANKING SECTOR AND MACROECONOMIC PERFORMANCE IN THE COUNTRIES OF THE EUROPEAN UNION
STABILITY OF THE BANKING SECTOR AND MACROECONOMIC PERFORMANCE IN THE COUNTRIES OF THE EUROPEAN UNION

Summary/Abstract: The paper aims to discuss the current challenges of the banking sector in terms of risks in bank lending and to highlight the importance of effective risk management. The analysis spans a 21-year period (2000-2020) and focuses on three groups of countries, namely all European Union (EU) countries, euro area countries and non-euro area countries. Using a multiple linear regression model and the Generalized Method of Moments (GMM) we empirically investigate the impact of macroeconomic factors on the stability of the banking sector, as measured by the non-performing loan (NPL) ratio. Our contribution consists in empirically analyzing the impact of macroeconomic factors on credit risk as measured by the NPL ratio and identifying its key determinants, while also assessing the stability of the banking sector.

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