IMPACT OF MACROECONOMIC FACTORS ON NON- PERFORMING LOANS (NPL) IN THE BANKING SECTOR IN KOSOVO

Over the last few years, more precisely, since the end of the global financial crisis, academic circles have increased their interest in the NLP and the empirical bibliography provides valuable information on the factors that influence them. According to studies conducted on non-performing loans, various analysts have tried to correlate the level of non-performing loans directly to two categories of factors: (1) macroeconomic factors and (2) banking or banking specific factors. Consequences in the banking industry as a result of non-performing loans may be large if no preventive steps are taken. Non-performing loans negatively affect the performance and stability of the banking industry, increasing provisioning, lending and in more severe cases may result in a financial institution in insolvent condition. The banking industry in Kosovo has also been very careful in terms of managing credit portfolio quality, so the rates of these loans are very low, which has made confidence in this sector to be even higher. The research will address the problem of NLPs through the econometric model, where the macroeconomic factors that are addressed in the research are: GDP, inflation, unemployment rate and interest rate, while banking factors are ROEA, ROAA and CAR. The research covers the period 2007-2019. The research results showed that inflation and interest rates have an impact on the JCEs in the banking sector in Kosovo