Mohaddes, K., Raissi, M. and Weber, A.

Can Italy Grow Out of Its NPL Overhang? A Panel Threshold Analysis

Economics Letters

Vol. 159 pp. 185-189 (2017)

Abstract: This paper examines whether a tipping point exists for real GDP growth in Italy above which the ratio of non-performing loans (NPLs) to total loans falls significantly. Estimating a heterogeneous dynamic panel–threshold model with data on 17 Italian regions over the period 1997–2014, we find that growth above 1.2%, if sustained for a number of years, is associated with a significant decline in the NPL ratio.

Keywords: Italy, Non-performing loans, Growth, Panel tests of threshold effects

JEL Codes: C23, E44, G33

Author links: Kamiar Mohaddes  

Publisher's Link: https://doi.org/10.1016/j.econlet.2017.08.001