The effect of interst rate spread on non-performing loans in Namibia
Abstract
This paper investigated the impact of interest rate spread on non-performing loans in
Namibia. The study employed the techniques of unit root, cointegration and error correction
model technique on the quarterly data covering the period 2001 to 2014. The findings show
that interest rate spread has a positive and statistical significant effect on non-performing
loans in Namibia. Furthermore the study also showed that inflation has a positive though not
statistical significant effect on non-performing loans in Namibia. Therefore, the positive
impact of interest rate spread suggest that increase in interest margins has potential of
increasing the probability of defaulting on loans by clients.