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of the banks were largely affected by of the Autoregressive Distributed Lag РBУAБNРKИINКGА
nonperforming loans, and the credit Modelling Approach (ARDL) model 67
policy of the banks was very conserva- show that of the specific bank de-
tive. This is the origin of the high par- terminants, profitability and credit
ticipation of nonperforming loans at growth in enterprises and the house-
the beginning of the analyzed period. holds have negative and statistically
The reform in the financial system in significant impact on the nonperform-
2001 and the changed ownership of ing loans both in enterprises and in
part of the banks and the promotion households, while solvency has a posi-
of banking standards which followed, tive and statistically important impact
contributed for improved functioning only in nonperforming loans in the en-
of the banking system and the credit terprises.
market started to revive. Nonperform-
ing loans, although they are still high When it comes to the macroeco-
as a percentage of the total loans, ex- nomic determinants, in both enter-
perienced annual rates of fall or mod- prises and households, the obtained
erate growth which is much weaker results indicate that there is negative
compared to the growth of the regu- relationship between the economic
lar, performing loans. In such condi- growth and the growth of nonper-
tions, their participation in the total forming loans. This confirmed the
loans reduced. theoretical postulates that in a period
of expansion, the creditworthiness of
Furthermore, the annual growth the enterprises and the households in-
of nonperforming loans in the pe- creases, which has a positive impact
riod 2004 –2007 had negative values, on timely servicing of debts, there-
which was a reflection of the continu- fore lower level of credit risk for the
ous reduction of the absolute amount banks. The results for the real foreign
of nonperforming loans against the exchange rate indicate that it is a sta-
absolute growth of the total exposure tistically important determinant only
to loan risk at the level of a banking in the first model, that is, in nonper-
sector. However, such movements to forming loans in enterprises. Of the
a great extent were primarily a result macroeconomic determinants, only
of the intensive credit support of the the inflation was not statistically im-
private sector which contributed for portant in the long-term relation,
“rejuvenation” of the credit portfolio however it was determined that this
of banks. With the transfer of the neg- determinant is statistically signifi-
ative effects of the World Financial cant in the short-term dynamics, only
Crisis at the end of 2008 and the be- in the second model, that is, when we
ginning of 2009, the macroeconomic used nonperforming loans in house-
sentiment in the country worsened, holds as a dependent determinant.
followed by the financial problems of The obtained result indicates that the
the private sector which followed the growth of inflation can make the debt
downward cycle in every economy. servicing cheaper due to the reduction
Such a condition reduced the credit- of the real value of the approved loans,
worthiness of the private sector and thereby it can lead to reduced rate of
had a negative reflection on the non- nonperforming loans in the short run.
functional portfolio of banks. The an-
nual rates of growth transformed into What are the next steps?
two-digit amounts which significantly The goal of this paper is determina-
exceeded the decreasing growth of the
regular credit portfolio of the banks. tion of the impact of the bank specific
and macroeconomic determinants on
What did the research show? nonfunctional loans in enterprises
The obtained results with the use and in households in the Republic of
Macedonia by applying the ARDL mod-
September 2016
