UNEMPLOYMENT AS A MAIN DETERMINANT OF NON-PERFORMING LOANS: THE CASE OF WESTERN BALKAN COUNTRIES

AQIFI, Elsana and SALIHI, Sindise and EMINI, Edrina (2025) UNEMPLOYMENT AS A MAIN DETERMINANT OF NON-PERFORMING LOANS: THE CASE OF WESTERN BALKAN COUNTRIES. International Scientific Journal in Economics, Finance, Business, Marketing, Management and Tourism, 12 (23-24). pp. 67-74. ISSN 2545-4544

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Abstract

Non-performing loans are a crucial determinant of the stability of the banking and financial sector within an economy. Their mismanagement can often lead to numerous financial problems and even banking crises. The level of non-performing loans is influenced by many factors, especially macroeconomic variables. Given the importance of the financial system in financing a country’s economic activities, as well as the role of reducing unemployment in socio-economic well-being, this paper aims to examine the impact of macroeconomic factors—including GDP, unemployment, and inflation—on non-performing loans in the Western Balkan countries. For the empirical analysis, this study employs OLS panel regression models, fixed effects (FE), and random effects (RE) models, using data from the World Bank covering the period 2000–2024. The findings highlight a positive and significant relationship between the unemployment rate and non-performing loans in the Western Balkans during this period. Conversely, GDP has a negative impact on non-performing loans, while inflation does not show any statistically significant effect. This study fills an empirical gap regarding the Western Balkan countries by suggesting that improvements in macroeconomic factors can contribute to the strengthening of the banking and financial system.

Item Type: Article
Uncontrolled Keywords: Unemployment rate, Non-performing loans, Financial system, Western Balkan countries
Subjects: Q Science > Q Science (General)
Divisions: Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User: Unnamed user with email zshi@unite.edu.mk
Date Deposited: 20 Nov 2025 15:11
Last Modified: 20 Nov 2025 15:11
URI: http://eprints.unite.edu.mk/id/eprint/2140

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