Journal of Economics and Financial Analysis, 8 (2), pp. 1-21, [2024]
URI: https://ojs.tripaledu.com/jefa/article/view/93/103

Factors Affecting Non-Performing Loans: Empirical Evidence from Commercial Banks in Uzbekistan


Westminster International University, Uzbekistan



Abstract

This paper applies a dynamic panel data approach to examine the main factors affecting non-performing loans (NPL) of commercial banks in Uzbekistan. The paper utilizes both bank-specific factors such as loan-to-deposit ratio, size, leverage, and type of ownership as well as macroeconomic factors, such as GDP growth rate and exchange rate to determine their significance in credit risk of commercial banks. The results indicate that current loan-to-deposit ratio (LDR) and leverage have positive impact on NPL ratio while higher GDP growth rate is associated with lower rate of NPL. However, lagged LDR and leverage ratios have shown negative relationship with NPL. Size, bank ownership type and exchange rate have not exhibited any significant impact on NPL.

Keywords

Banking; Credit Risk Management; Central Asia, Uzbekistan, Non-Performing Loans; Dynamic Panel Data.

JEL Classification

C23, G21.

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