The Dynamics of Non-Performing Loans During Banking Crises: A New Database

Anil Ari, Sophia Chen, Lev Ratnovski
2019 Social Science Research Network  
This paper presents a new dataset on the dynamics of non-performing loans (NPLs) during 88 banking crises since 1990. The data show similarities across crises during NPL build-ups but less so during NPL resolutions. We find a close relationship between NPL problems-elevated and unresolved NPLs-and the severity of post-crisis recessions. A machine learning approach identifies a set of pre-crisis predictors of NPL problems related to weak macroeconomic, institutional, corporate, and banking
more » ... conditions. Our findings suggest that reducing pre-crisis vulnerabilities and promptly addressing NPL problems during a crisis are important for post-crisis output recovery.
doi:10.2139/ssrn.3523145 fatcat:qisnb7vaxvdk7p4umn22ju33ym