Cross-Border Spillovers from Reducing Non-Performing Loans

Cross-Border Spillovers from Reducing Non-Performing Loans

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Cross-Border Spillovers from Reducing Non-Performing Loans

This paper sheds light on the effectiveness of policies addressing high non-performing loans (NPLs). Using data on ownership of subsidiaries of foreign banks in Emerging Europe, we first show that changes in NPLs of parent banks are associated with changes in NPLs of their foreign affiliates, with elasticity of around 0.25.

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