The purpose of this study is to find the determinants of bank’s non-performing Loan in the context of Pakistan. This secondary study used panel data of 39 banked across 6 years (2006-2011) in Pakistan. The current study used total 11 variables in which three macroeconomics and eight bank specific variables. Data is collected from State bank of Pakistan (SBP) annual reports, Pakistan economic surveys. The pooled OLS technique and used to estimate the effect of bank specific and macroeconomic variables to explore the determinants of NPL. Results reveal that Unemployment (UN) and real lending rate(RLR) is positively associated with Non-Performing Loans and Gross Domestic product(GDP) is negatively associated with NPL. The study concluded that NPLs for private domestic banks is more than public banks. In the last quarter of 2011, the NPL was at Peak due to heavy flood and rain. The NAB (National accountability bureau) must established mobile courts for early settlement of Problem loans cases and state bank of Pakistan must update the CIB (Credit information bureau) report on daily basis. This study more focused on macroeconomic variable instead of bank specific variables.
Unemployment, Determinants, Non-Performing Loans, Pakistan
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