This paper examines the impact of insolvency framework reforms on non-performing loans (NPLs),

extending prior research by considering both creditor and debtor factors. Using a new metric derived

from the European Banking Authority's Transparency Exercises, we focus on the insolvency regime

of the debtor's country in cross-border insolvencies. Furthermore, we contribute to the creditor vs.

debtor-friendly insolvency regime debate by analysing reforms according to their orientation. Our

findings suggest that debtor-oriented reforms are more effective in reducing NPLs, particularly

benefiting non-SMEs and large banks in high NPL contexts. Moreover, such reforms have a larger

effect in non-debtor and creditor-friendly insolvency regime countries. Finally, we also find that

creditor-oriented reforms are associated with higher NPL ratios.

Keywords: Non-Performing Loans, Insolvency Regime, Transparency Exercise, Reform, Banking

Sector

JEL classification: G15, G21, G33