Capital flows and non-performing loans: An empirical study of the European debt crisis
(2016) NEKN01 20161Department of Economics
- Abstract (Swedish)
- This study investigates the relationship between capital imports and non-performing loans (NPLs) in the context of the European debt crisis. The empirical analysis is based on a panel data set covering 22 countries in the European Union (EU) between year 2001 and 2014. All individual estimations in the empirical analysis indicate a significant and negative relationship between capital imports and NPLs. The results are robust in the sense that two different estimation techniques were used: the First-difference Arellano-Bond generalized method of moments (GMM) estimators and Ordinary least squares (OLS). The results support other studies, which emphasize the large inflow of debt-type capital in the pre-crisis period from core EU-countries,... (More)
- This study investigates the relationship between capital imports and non-performing loans (NPLs) in the context of the European debt crisis. The empirical analysis is based on a panel data set covering 22 countries in the European Union (EU) between year 2001 and 2014. All individual estimations in the empirical analysis indicate a significant and negative relationship between capital imports and NPLs. The results are robust in the sense that two different estimation techniques were used: the First-difference Arellano-Bond generalized method of moments (GMM) estimators and Ordinary least squares (OLS). The results support other studies, which emphasize the large inflow of debt-type capital in the pre-crisis period from core EU-countries, such as Germany, the Netherlands and the UK, to periphery countries, such as Greece, Ireland and Spain. This dependency on foreign interbank lending turned into severe national liquidity crises – and increased ratios of NPLs – when European banks in in the beginning of the crisis started to squeeze capital inflows to financial institutions in the periphery economies. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/8891064
- author
- Borén, Erling LU
- supervisor
- organization
- course
- NEKN01 20161
- year
- 2016
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Capital imports, debt flows, non-performing loans, the EU, GMM.
- language
- English
- id
- 8891064
- date added to LUP
- 2016-09-09 14:05:12
- date last changed
- 2016-09-09 14:05:12
@misc{8891064, abstract = {{This study investigates the relationship between capital imports and non-performing loans (NPLs) in the context of the European debt crisis. The empirical analysis is based on a panel data set covering 22 countries in the European Union (EU) between year 2001 and 2014. All individual estimations in the empirical analysis indicate a significant and negative relationship between capital imports and NPLs. The results are robust in the sense that two different estimation techniques were used: the First-difference Arellano-Bond generalized method of moments (GMM) estimators and Ordinary least squares (OLS). The results support other studies, which emphasize the large inflow of debt-type capital in the pre-crisis period from core EU-countries, such as Germany, the Netherlands and the UK, to periphery countries, such as Greece, Ireland and Spain. This dependency on foreign interbank lending turned into severe national liquidity crises – and increased ratios of NPLs – when European banks in in the beginning of the crisis started to squeeze capital inflows to financial institutions in the periphery economies.}}, author = {{Borén, Erling}}, language = {{eng}}, note = {{Student Paper}}, title = {{Capital flows and non-performing loans: An empirical study of the European debt crisis}}, year = {{2016}}, }