Government debt accumulation and non-performing loans: An ARDL bounds testing approach


  • Maria Karadima Athens University of Economics and Business
  • Helen Louri Athens University of Economics and Business



Non-performing loans, Government debt, Fiscal balance, ARDL Bounds testing, Greece


Following the financial and debt crises in the euro area and the global COVID pandemic, governments supported their economies by increasing borrowing and accumulating debt with ambiguous long-run effects on non-performing loans (NPLs). We empirically investigate the determinants of NPLs using quarterly (2003Q1-2020Q2) aggregate data for Greece and applying the autoregressive distributed lag (ARDL) bounds testing approach. We offer new policy-making relevant evidence by showing that government debt has a significant and positive long-term impact on NPLs irrespective of possible short-term dynamics that appear to provide a temporary relief. Fiscal balance, on the contrary, exerts a negative long-term effect justifying the quest for surpluses post-COVID.


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How to Cite

Karadima, M., & Louri, H. (2022). Government debt accumulation and non-performing loans: An ARDL bounds testing approach. Economics and Business Letters, 11(4), 150–160.