Working Paper Article Version 2 This version is not peer-reviewed

Impact of High Non-performing Loan Ratios on Bank Lending Trends and Profitability

Version 1 : Received: 6 August 2020 / Approved: 7 August 2020 / Online: 7 August 2020 (09:22:14 CEST)
Version 2 : Received: 12 August 2020 / Approved: 12 August 2020 / Online: 12 August 2020 (10:12:13 CEST)

How to cite: Jing, E. Impact of High Non-performing Loan Ratios on Bank Lending Trends and Profitability. Preprints 2020, 2020080178 Jing, E. Impact of High Non-performing Loan Ratios on Bank Lending Trends and Profitability. Preprints 2020, 2020080178

Abstract

The goal of this paper is to explore the relationship between the specific non-performing loan ratio (NPL ratio) and the corresponding impact on the bank’s profitability and lending behavior. It also seeks to investigate the macroeconomic impacts of economies with excessively high NPL ratios as well as the efficacy and impact of alleviation measures used by banks and governments around the world to help facilitate a decrease in high NPL ratios. The possible implications and effects of the COVID-19 pandemic on NPL ratios is also addressed in this paper. It is found that when excessively high NPL ratios go unaddressed, the economy tends to suffer. On the other hand, this study shows that when measures are taken to reduce or eliminate the high NPL ratios, economic performance improves, and the reduction has a clear positive impact on the economy.

Subject Areas

NPL Ratio; non-performing loans; economic recovery

Comments (1)

Comment 1
Received: 12 August 2020
Commenter: Eric Jing
Commenter's Conflict of Interests: Author
Comment: Multiple formatting changes were made to the paper to fit guidelines for many journal submissions. Previously grammar issues were fixed as well as reformatting the sections of the research paper to five sections.
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