The Correlation of Nonperforming Loans between Large and Small Banks

• Authors: Hugo Rodríguez Mendizábal.
• BSE Working Paper: 789 | September 15
• Keywords: bank size , nonperforming loans
• JEL codes: G21
• bank size
• nonperforming loans

This short paper presents a new stylized fact about bank nonperforming loans. According to the data for the US, the average of the ratio of noncurrent loans to total loans for large banks presents a very high negative correlation with the same ratio for small banks. This result remains valid for different measures of bank size as well as controlling for different bank characteristics such as charter class, specialization or geographical location.