The Impact of Inflation and Income Growth on Non-Performing and Restructured Loans: The Case of Bulgaria
The Impact of Inflation and Income Growth on Non-Performing and Restructured Loans: The Case of Bulgaria

Author(s): Violeta Todorova
Subject(s): Politics / Political Sciences, Politics, Social Sciences, Economy, National Economy, Business Economy / Management, Sociology, Economic policy, Evaluation research, Economic development, Financial Markets
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: inflation; income growth; non-performing loans
Summary/Abstract: This paper examines the relationship between non-performing and restructured loans, inflation and income growth in Bulgaria. The linear regression analysis shows that there is significant negative impact of inflation and income growth on NPLs and restructured loans for consumer credits and significant negative impact of inflation on NPLs and restructured loans for housing credits. There is no heteroscedasticity of the errors which proves that the coefficients are precise. Results show lack of multicollinearity, normal distribution of residuals and correct linear functional form of the model. However, there is autocorrelation of residuals and weak explanatory power. For improving the explanatory power of the linear regression model, more explanatory variables should be included - bank-specific, macroeconomic and institutional determinants.

• Details
• Contents