The Macroeconomic Determinants of Non-Performing Loans in Bangladesh: An Empirical Analysis

Authors

Md Ali Arifur Rahman

Abstract

Bank plays intermediary role which is very important for the development of any nation that can be affected by the non-performing loan. This study investigated the macroeconomic determinants of non-performing loans in Bangladesh using the time series data from 1990 to 2020 collected from Bangladesh Bank, Bangladesh bureau of statistics, World Bank, International Monetary Fund (IMF) data on World economic outlook and International Labour Organization (ILO) Statistics. The time series is chosen from 1990 to 2020 because of expansion of private commercial banks and availability of data of gross loans and amount of Non-performing loan amounts. The dependent variable considered in this study was percentage of non-performing loan to gross loan (NPL) and the independent variables were gross domestic product growth rate (GDPGR), inflation (INF), lending rate (LR), exchange rate (ER), money supply to gross domestic product (M2GDP) and unemployment rate (UR). NPL was positively influenced by GDPGR, LR and ER and negatively influenced by INF, M2GDP and UR. The government should direct its monetary and fiscal policies towards reducing Non-Performing Loans by creating an environment for business growth for the provision of social and infrastructural facilities.

Suggested Citation (APA 7th)

Rahman, M. (2022). The Macroeconomic Determinants of Non-Performing Loans in Bangladesh: An Empirical Analysis. International Journal of Applied Research in Business and Management, 3(2), 81-90. https://doi.org/10.51137/ijarbm.2022.3.2.6

Publication Information

International Journal of Applied Research in Business and Management
Volume: 3, Issue: 2, June 2022
DOI: https://doi.org/10.51137/ijarbm.2022.3.2.6

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