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Non-performing Loans in the Euro Area

In: Risk and Regulation in Euro Area Banks

Author

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  • Francesca Arnaboldi

    (University of Milan)

Abstract

Since the progress that banks have made in restructuring has varied among countries, this chapter investigates cross-country heterogeneity in the non-performing loans restructuring process focusing on those countries with the highest non-performing loan ratios. Non-performing loans created by local real estate bubbles have proven easier to deal with than those from corporates or small- and medium-sized enterprises in economies struggling for competitiveness. Restructuring loans for corporates and small and medium-sized enterprises is typically more difficult as these counterparties are often financed by multiple banks, and creditor coordination therefore becomes more complex. Banks in countries with high non-performing loan ratios are expected to continue the process of restructuring, writing off and selling off in the next few years to significantly reduce their risk exposure.

Suggested Citation

  • Francesca Arnaboldi, 2019. "Non-performing Loans in the Euro Area," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Risk and Regulation in Euro Area Banks, chapter 0, pages 43-66, Palgrave Macmillan.
  • Handle: RePEc:pal:pmschp:978-3-030-23429-4_3
    DOI: 10.1007/978-3-030-23429-4_3
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