DETERMINANTS OF BANKING NON-PERFORMING LOANS: EVIDENCE OF EU MEMBERS

Non-performing loans (NPLs) represent the negative part of the performance registered by the banking industry. This type of loans can be of several categories, with different purposes and maturities, but which they have registered in their component is the outstanding payments. Although these are always highlighted in the banks' portfolio as payment deficiencies due to either internal or external factors. Therefore, one of the factors that influences the appearance of non-performing loans (NPLs) is represented by the clients who are unable to honor the payment of their loan rates. When we look at it from a macroeconomic perspective, non-performing loans (NPLs) are affected by factors such as the financial crisis, inflation, unemployment, the real estate market, etc. Thus, this type of loan decreases the annual profitability of banks and in certain situations can lead to the insolvency or bankruptcy of banks. Reducing or counteracting the development of these loans within the banking systems of the European Union is constantly carried out by both domestic banks and by the competent authorities such as national banks, the International Monetary Fund (IMF), the European Central Bank (ECB). In order to see what impact the factors that determine the appearance or increase of non-performing loans (NPLs) have, an analysis is available during the financial crisis and during the recession period after it. For this study, the Fixed effects method was used, an analysis that took into account all banking systems in the European Union.