Sustainable development and bank non-performing loans: are they correlated?

Abstract

PurposeThis paper aims to investigate the correlation between banking sector non-performing loans (NPLs) and the level of sustainable development.Design/methodology/approachPearson correlation test statistic was used to assess the correlation between bank NPLs and sustainable development.FindingsThere is a significant positive correlation between banking sector NPLs and the level of sustainable development measured by the sustainable development index (SDI). The significant positive correlation is evident in European countries and in countries in the region of the Americas. There is a significant negative correlation between banking sector NPLs and achieving SDG3 and SDG7 in African countries and European countries. There is also a significant negative correlation between NPLs and achieving SDG10 in European countries. There is a significant positive correlation between banking sector NPLs and achieving SDG4 and SDG7 in the region of the Americas. There is also a significant positive correlation between NPLs and achieving SDG10 in African countries and in countries in the region of the Americas.Originality/valueThe present study is unique and different from other studies because it used a unique SDI to capture the level of sustainable development. The analysis is also unique because it covers several regions, which have not been covered in previous studies.