A nonperforming loan refers to a loan that is not paid as and when due, and it is a significant issue that banks need to keenly consider for them to exist and be stable. There are several factors accountable for nonperforming loans; some are firm‐specific, while others are macroeconomic factors. The study of banking sector stability is a foundation of modern macroeconomic policy of a bank‐based economy. In this view, this study aims to investigate the determining factors from both perspectives. This study used the dynamic panel regression analysis on 110 commercial banks from nine countries for the years 2010–2017 and a total of 880 observations were examined. The system generalized method of moments found that lagged nonperforming loan, lending rate, capital adequacy, credit growth, cost income ratio, as well as real interest rate, were the significant factors affecting nonperforming loans in lower middle‐income countries’ banking sector. Hence, it is recommended that commercial banks ought to establish regulations to amend their policies regarding credit advancement in alignment with the factors highlighted above. Also, banks need to ensure their loaned‐out funds are dedicated to the envisioned purpose via improved credit monitoring that would spur economic sustainability.

中文翻译：

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调查影响商业银行不良贷款的因素：以非洲中低收入国家为例

不良贷款是指未到期偿还的贷款，这是银行需要认真考虑使其存在并保持稳定的一个重要问题。不良贷款有多种原因可归结；一些是针对公司的，而另一些是宏观经济因素。对银行业稳定性的研究是现代基于银行的宏观经济政策的基础。有鉴于此，本研究旨在从两个角度研究决定因素。这项研究对来自9个国家的110家商业银行进行了2010年至2017年的动态面板回归分析，共检查了880个观察值。系统的广义矩法发现，不良贷款，贷款利率，资本充足率，信贷增长，成本收入比率以及实际利率落后，是影响中低收入国家银行业不良贷款的重要因素。因此，建议商业银行应建立法规，以与上述突出的因素相一致地修改其关于信贷发展的政策。此外，银行需要通过改善信贷监控以确保经济可持续性，确保借出资金专用于预期的目的。