Political Stability and Nonperforming Loans: Evidence from Jordanian Banks

The reasons for defaulting on loans and the factors associated with defaulting on loans have been discussed in many previous studies. Despite the abundance of research dealing with non-performing loans and their causes, there are very few studies linking non-performing loans to political stability. The research concentrated on explaining the reasons for defaulting on loans in Jordan between 1998 and 2018. Three estimators DFE, PMG, and MG were used in the model. It was found that low rates of return on assets, return on equity, political stability, and GDP growth all raise non-performing loan rates in the long run. High inflation rates and interest rate spreads raise the rates of non-performing loans.