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РBУAБNРKИINКGА
The bank specific and macroeconomic
determinants of nonperforming loans in the
Republic of Macedonia:
Comparative analysis of loans
of the enterprises and the
households*
Jordan Kjosevski N onperforming loans are risks, panic and outflow of deposits,
one of the basic indicators limitation of the financial intermedia-
The author is a doctor of of the financial “health” tion and ultimately, limitation of in-
economic sciences of the bank and they are vestments and growth. Furthermore,
the main postulate of the experience shows that the increase of
* This is a summary credit risk in the banking system. The nonperforming loans has an essential
of the research paper increase of the nonperforming loans role in the emergence of banking cri-
which won the Annual indicates that there is an increasing ses (Demirgüç-Kunt and Detragiache,
award of the National number of economic agents who have 1998; González-Hermosillo, 1999).
Bank of the Republic of difficulties to repay the obligation on
Macedonia for young the basis of a borrowed loan, and this This is where the main motive of
researchers for best increases the probability for not re- this paper arises, which is to research
paper in the field of turning the loan (credit loan). In such the factors that affect nonperforming
macroeconomy and an event the value of the assets of the loans in the Republic of Macedonia.
banks and banking bank is eroded, and its wealth reduces We find the importance of the paper
systems for 2016 as a result of the losses on the basis particularly in the fact that according
of write-offs (Mörttinen et al., 2005). to the information of the author, this
Considering the fact that banks do not paper is the first attempt for an analy-
function independently and separately sis of the combined impact of the mac-
from each other, rather their function- roeconomic and the sector (aggregate)
ing is intertwined with many feedback banking determinants in Macedonia.
relations, the impaired performances Another issue, which to our knowl-
of a bank can easily be transferred to edge has been left out so far, is a com-
the entire banking sector and they can parative study of nonperforming loans
cause financial instability and stress. of the different types, of loans and
In the worst case scenario, the dete- their appropriate determinants. Hav-
riorating quality of loans in the bank- ing this in mind, a systemic and econo-
ing sector poses a threat of systemic metric analysis has been performed
within the paper, of the determinants
September 2016 65
