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Two Approaches to Resolving Nonperforming Assets During Financial Crises

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  • Mr. David Woo

Abstract

The unprecedented rise in nonperforming assets during the recent Asian financial crisis severely tested the limit and capacity of the existing asset management infrastructure, leading policymakers to consider new approaches to resolve them. This paper examines two such approaches—the creation of asset management companies and the development of out-of-court centralized corporate debt workout frameworks—that came to define the core asset management setting in countries most seriously affected by the crisis. In addition to investigating their respective role, and evaluating their strengths and weaknesses, this paper seeks to benchmark some best practices in their design.

Suggested Citation

  • Mr. David Woo, 2000. "Two Approaches to Resolving Nonperforming Assets During Financial Crises," IMF Working Papers 2000/033, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2000/033
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    Citations

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    Cited by:

    1. Drozd, Lukasz A. & Serrano-Padial, Ricardo, 2018. "Financial contracting with enforcement externalities," Journal of Economic Theory, Elsevier, vol. 178(C), pages 153-189.
    2. Mr. Marc C Dobler & Mr. Simon T Gray & Diarmuid Murphy & Bozena Radzewicz-Bak, 2016. "The Lender of Last Resort Function after the Global Financial Crisis," IMF Working Papers 2016/010, International Monetary Fund.
    3. Suarez, Javier & Sánchez Serrano, Antonio, 2018. "Approaching non-performing loans from a macroprudential angle," Report of the Advisory Scientific Committee 7, European Systemic Risk Board.
    4. Dimitris ANASTASIOU, 2022. "Management and Resolution Methods of Non-performing Loans: A Review of the Literature," Springer Books, in: Hachmi BEN AMEUR & Zied FTITI & Wael LOUHICHI & Jean-Luc PRIGENT (ed.), Crises and Uncertainty in the Economy, chapter 0, pages 187-201, Springer.
    5. Pandey, Ashish, 2016. "High Bids and Low Recovery: A Possible Case for Non-Performing Loan Auctions in India," MPRA Paper 75254, University Library of Munich, Germany.
    6. Parven, Salena, 2011. "Nonperforming loans of commercial banks in Bangladesh," MPRA Paper 65248, University Library of Munich, Germany, revised 28 Dec 2011.
    7. Gary Gorton & Lixin Huang, 2004. "Liquidity, Efficiency, and Bank Bailouts," American Economic Review, American Economic Association, vol. 94(3), pages 455-483, June.
    8. Ashish Pandey, 2022. "A taxonomy of asset management companies," Journal of Banking Regulation, Palgrave Macmillan, vol. 23(2), pages 199-209, June.
    9. Miroslav Kollár & Luboš Komárek, 2009. "Možnosti řešení problematických aktiv komerčních bank [Selective Approaches and Experiences with Problematic Assets in Banking Sector]," Politická ekonomie, Prague University of Economics and Business, vol. 2009(5), pages 601-621.
    10. Rixtel, Adrian van & Wiwattanakantang, Yupana & ウィワッタナカンタン, ユパナ & Souma, Toshiyuki & 相馬, 利行 & Suzuki, Kazunori & スズキ, カズノリ, 2002. "Banking in Japan: Will "Too Big To Fail" Prevail?," CEI Working Paper Series 2002-16, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    11. Eyup Kadioglu & Niyazi Telceken & Nurcan Ocal, 2017. "Effect of the Asset Quality on the Bank Profitability," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(7), pages 60-68, July.
    12. Mr. Magnus Saxegaard & Ms. Michaela Erbenova & Ms. Yan Liu, 2011. "Corporate and Household Debt Distress in Latvia: Strengthening the Incentives for Market-Based Approach to Debt Resolution," IMF Working Papers 2011/085, International Monetary Fund.
    13. He, Dong, 2002. "Resolving Non-performing Assets of the Indian Banking System," MPRA Paper 9758, University Library of Munich, Germany.
    14. Ijaz Hussain, 2017. "Corporate Financial Leverage, Asset Utilization and Nonperforming Loans in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 22(1), pages 37-70, Jan-June.

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