Assessing the Impact of Nonperforming Loans on Economic Growth in The Bahamas

This paper examines the extent to which economic output and other variables affect nonperforming loans in The Bahamas utilizing a vector error correction (vec) model. It also seeks to determine if there is a feedback response from nonperforming loans to economic growth. Data utilized in the study spanned the period September 2002 to December 2011. The main findings reveal that growth in economic activity tends to lead to a reduction in nonperforming loans, and there is additionally a small but significant feedback effect from nonperforming loans to output.