Bank non-performing loans research around the world

Purpose This article presents a literature review of bank non-performing loans (NPLs) research around the world and suggests directions for future research. Design/methodology/approach The study used the thematic and bibliometric literature review methodologies to present a review of the recent NPL literature that have emerged since 2020. Findings Significant NPL research has emerged from the European, Asian and African regions, while fewer research studies have emerged from the Asia–Pacific, North America, Latin America and Caribbean regions as well as from the South Asian Association for Regional Cooperation and Organization for Economic Cooperation and Development countries. The new NPL determinants in the recent literature are corporate governance, fintech, financial inclusion, country risks, regulatory quality, political risks, shadow banking activity, the COVID-19 pandemic, public and/or external debt, country risks, real house prices and the independence of the central bank. The common regional NPL determinants are corruption, gross domestic product (GDP), debt, loan growth, inflation, capital adequacy ratio, lending rate, competition, the regulatory environment and GDP growth. The common theories used in the recent literature to explain the behavior of NPL are agency theory, stakeholder theory, information asymmetry theory and moral hazard theory, while the common empirical methodologies used are the panel regression and system generalized method of moments regression methods. Practical implications Financial regulators, bank supervisors and banking scholars should pay attention to the new emerging determinants of NPL. They should also understand the effect of NPL on financial and/or banking stability so that safeguards can be put in place to minimize the adverse effect of NPLs. More research is needed to provide insights into this area. Originality/value To date, no study has presented an overview of the post-2020 NPL literature to identify the new determinants and effects of NPL across several contexts and regions.