Browsing by Author "Ramos, Errol John A."

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    An econometric analysis of the non-performing loans in the Philippine banking system and its sensitivity to leading economic indicators and to type of loans
    (2002-03) Ramos, Errol John A.; Alburo, Florian
    The paper examines the performance of the Philippine banking system and its level of non-performing loans during a five-year period (1997-2001). It pays particular attention to the sensitivity of Gross Domestic Product (GDP), Peso/Dollar Exchange rate and domestic interest rates to an increase in the level of non-performing loans. Furthermore, it also illustrates how an increase in non- performing loans affects the respective outstanding loans of the different industries of the economy. This paper argues that the level of non-performing loans is rising steadily from 1997-2001. Using multiple regression, it shows that NPL ratio is negatively correlated to GDP and positively correlated to the Peso depreciation and surprisingly, negatively correlated to the domestic interest rate. Furthermore, among industries, if NPL ratio increases, Electricity, Gas and Water, Community, Social and Personal Services and Transportation, Storage and Communication find it more difficult to pay back loans on time.