Non-performing Loans and Government Taxes in the Albanian Banking System

Authors

  • Ines Nurja

Abstract

Following the financial crisis of 2008, banking institutions all over the world have been reviewing their policies and monitoring the main indicators that might warn a possible default or crisis. One of the most important indicators consistently under control has been the non-performing loans. A lot of efforts to explain the non performing loans factors have taken place in Albania including both macroeconomic and microeconomic factors. This study includes a special reference to the non-performing loans indicator being affected by certain macroeconomic factors, especially by corporate taxes, which has not been studied before. The in-depth analysis considers the following variables: GDP growth rate, the inflation rate, the interest rate and corporate taxes as a dummy variable and includes all banks for a period of 5 years. The study aims to find if there exists any relationship between the NPLs ratio and corporate taxes following the rationale of NPLs being increased as a consequence of tax ratio increased, due to several governmental policies. The results of the regression analysis used, showed up that interest rates have a statistically important impact on non-performing loans. The corporate taxes variable proves to be statistically significant at a level of 90%, which actually gives the possibility for further research in a wider database for a larger time period.

DOI: 10.5901/mjss.2016.v7n6p129

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Published

2016-11-05

How to Cite

Non-performing Loans and Government Taxes in the Albanian Banking System. (2016). Mediterranean Journal of Social Sciences, 7(6), 129. https://www.richtmann.org/journal/index.php/mjss/article/view/9581