We Are Different: The Drivers of Asset Quality in Loan Type and Sectoral Breakdowns
| Title: |
We Are Different: The Drivers of Asset Quality in Loan Type and Sectoral Breakdowns |
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Number: |
25/04 |
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Author(s): |
Mehmet Selman Çolak, Yavuz Kılıç, Hüseyin Öztürk, Mehmet Emre Şamcı |
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Language: |
English |
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Date: |
February 2025 |
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Abstract: |
This study employs model averaging methods to analyze the determinants of non-performing loans (NPLs) in the Turkish banking sector. The characteristic drivers of NPL are examined separately for different loan types categorized by customer segments (consumer loans, corporate loans, SME loans, mortgage loans, credit cards, general purpose loans, vehicle loans) and sectors (manufacturing, agriculture, construction etc.). Our results confirm that asset quality, proxied by NPL ratio of different loan segments, and economic sectors present unique relations with macroeconomic and banking variables. We conclude that customized risk management practices may bring significant benefits given that credit risk in different subcomponents of the economy responds to macroeconomic and banking variables differently. | |
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Keywords: |
NPL ratio, Loan segments, Emerging economies | |
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JEL Codes: |
E58; G10; G20 | |