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Management and Resolution methods of Non-performing loans: A Review of the Literature

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  • Anastasiou, Dimitrios

Abstract

In the financial crisis of 2007, many banks with high level of Non-performing loans (NPLs) found their sources of capital dried up, which occurred because of bad management. Huge amounts of NPLs imply both a lack of management methods and lack of capital. Also, high NPL levels have resulted to negative effects to banks’ lending activity, making bank officers-managers more concern for the future of the whole banking system. The purpose of this study is twofold. First, to present some NPL management methods that already exist in the literature and second, to make a clear distinction between the ex-post and ex-ante management of NPLs. I tried to collect in one paper what other researchers suggested for the proper management and fight against NPLs for different kinds of banking systems around the world. Hopefully, by examining these methods, banks will be able to cope with the problem of NPLs.

Suggested Citation

  • Anastasiou, Dimitrios, 2016. "Management and Resolution methods of Non-performing loans: A Review of the Literature," MPRA Paper 77581, University Library of Munich, Germany, revised 2017.
    • Handle: RePEc:pra:mprapa:77581
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    References listed on IDEAS

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    1. Masahiro Inoguchi, 2012. "Nonperforming loans and public asset management companies in Malaysia and Thailand," Asia Pacific Economic Papers 398, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    2. Berger, Allen N. & DeYoung, Robert, 1997. "Problem loans and cost efficiency in commercial banks," Journal of Banking & Finance, Elsevier, vol. 21(6), pages 849-870, June.
    3. Louzis, Dimitrios P. & Vouldis, Angelos T. & Metaxas, Vasilios L., 2012. "Macroeconomic and bank-specific determinants of non-performing loans in Greece: A comparative study of mortgage, business and consumer loan portfolios," Journal of Banking & Finance, Elsevier, vol. 36(4), pages 1012-1027.
    4. Mr. Dong He, 2004. "The Role of Kamco in Resolving Nonperforming Loans in the Republic of Korea," IMF Working Papers 2004/172, International Monetary Fund.
    5. Ristan Stijepović, 2014. "Recovery and Reduction of Non-Performing Loans – Podgorica Approach," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 3(3), pages 101-118.
    6. Bonin, John P. & Huang, Yiping, 2001. "Dealing with the bad loans of the Chinese banks," Journal of Asian Economics, Elsevier, vol. 12(2), pages 197-214.
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    8. Mr. Raphael A Espinoza & Mr. Ananthakrishnan Prasad, 2010. "Nonperforming Loans in the GCC Banking System and their Macroeconomic Effects," IMF Working Papers 2010/224, International Monetary Fund.
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    Cited by:

    1. Athanasios Kolliopoulos, 2021. "Reforming the Greek Financial System: a decade of failure," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 155, Hellenic Observatory, LSE.
    2. Kolliopoulos, Athanasios, 2021. "Reforming the Greek financial system: a decade of failure," LSE Research Online Documents on Economics 108523, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    Non-performing loans; NPL management; bank restructuring; economic policy reform; financial stability; macroprudential policy; poor credit risk management;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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