Non-Performing Loans and Economic Growth

Non-Performing loans are the big challenge for the Banking sector. This study examined this serious issue by developing the relationship between the Non-Performing Loans and the Economic Growth. For this, the data of Economic indicators (GDP Growth, Interest Rates and Inflation) and Nonperforming Loans are taken for the time span of 1998-2010 on annually basis. By applying the regression we concluded there is Negative relationship between the GDP and Non-Performing loans but there is positive relationship between the interest rate and Non-performing Loans. Finally Non-performing loans hurts the Economic growth.