Government debt accumulation and non-performing loans: An ARDL bounds testing approach

• Maria Karadima ^[1] ; Helen Louri ^[2]
  1. [1] Athens University of Economics and Business

     Athens University of Economics and Business

     Dimos Athens, Grecia

     
  2. [2] London School of Economics
• Localización: Economics and Business Letters, ISSN-e 2254-4380, Vol. 11, Nº. 4, 2022, págs. 150-160
• Idioma: inglés
• Enlaces
  • Texto completo (pdf)
• Resumen

  • Following the financial and debt crises in the euro area and the global COVID pandemic, governments supported their economies by increasing borrowing and accumulating debt with ambiguous long-run effects on non-performing loans (NPLs). We empirically investigate the determinants of NPLs using quarterly (2003Q1-2020Q2) aggregate data for Greece and applying the autoregressive distributed lag (ARDL) bounds testing approach. We offer new policy-making relevant evidence by showing that government debt has a significant and positive long-term impact on NPLs irrespective of possible short-term dynamics that appear to provide a temporary relief. Fiscal balance, on the contrary, exerts a negative long-term effect justifying the quest for surpluses post-COVID.