Is the Special Purpose Vehicles Act Responsible for the Decline in NPL Ratios

Abstract

Normal 0 false false false MicrosoftInternetExplorer4 This study aimed to determine if the SPV Act was actually responsible for the marked decline in NPL ratios this past four years. Using aggregated data for the entire Philippine Banking System, segregated according to type of bank, results suggest that the SPV Act was not responsible for the decline in the NPL ratios but may be attributed to a downward trend in the loan to asset ratio where values are getting closer to the interval for which NPL ratios are at a minimum, economic sluggishness as measured by deviations from the long run trend of macroeconomic variables, and seasonal patterns in macroeconomic variables coinciding with fluctuations in NPL ratios.