The banking system is harmed by rising levels of nonperforming loans (NPL) because they erode capital, decrease liquidity, lessen lending capacity and reduce investors' trust. The banking industry in Bangladesh had a NPL ratio of 12.60% at the end of June 2024, which was a big problem for the sector. Now is the moment to figure out what causes NPLs. Prior research indicates that some bank-specific, macroeconomic, and governance indicators contribute to the rising trend of NPLs. However, the current research seeks to examine the influence of macroeconomic variables only on NPLs in Bangladesh. GDP, interest rate, unemployment rate, currency exchange rate, and inflation rate were employed as independent variables. The World Bank database was used to get macro data. In addition, data on the dependent variable NPLs were gathered from 20 randomly chosen commercial banks in Bangladesh from 2013 to 2025. The GMM model was used to ascertain the extent of correlations between dependent and independent variables. The study's findings indicate that the interest, unemployment, currency exchange, and inflation rate have influence on NPLs. But the effect of GDP on NPLs was negative. The study's results will assist the regulatory authority, policy makers, depositors, borrowers, and investors make better choices in the future. Keywords: NPLs, Macroeconomics factors, Private commercial banks, GMM, Bangladesh.
05-Sep-2026
