The sustainability of banking sector results in three new European Union members
by Mejra Festic, Jani Beko
International Journal of Sustainable Economy (IJSE), Vol. 1, No. 2, 2009

Abstract: This article examines a range of variables influencing non-performing loan (NPL) ratios in the Czech Republic, Slovakia and Slovenia, as an indicator of the sustainability of banking sector results. Two basic conclusions were drawn from the empirical analysis. First, since the pro-cyclicality of the banking sector's assets quality and export growth has been proven, the weakening of foreign demand could be expected to aggravate their NPL ratio. Second, in the observed sample of countries, the rising credit/asset ratio increased the NPL ratio's dynamics, which indicates the need to devote more attention to supervising banks' lending activities.

Online publication date: Sun, 08-Feb-2009

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