The Threat of Non-Performing Loans in China in Lights of the Recent Crisis

Ciobanu Gheorghe (), ªarlea Mihaela () and Manþa ªtefan George ()
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Ciobanu Gheorghe: Babeº-Bolyai” University Cluj-Napoca Faculty of Economics and Business Administration
ªarlea Mihaela: Babeº-Bolyai” University Cluj-Napoca Faculty of Economics and Business Administration
Manþa ªtefan George: Babeº-Bolyai” University Cluj-Napoca Faculty of Economics and Business Administration

Ovidius University Annals, Economic Sciences Series, 2012, vol. XII, issue 2, 21-26

Abstract: In the lights of the recent crisis, the monetary policy became the most important weapon that an economy must rely upon, considering that the banking system was the first one to be affected by the crisis and then the effects had spread upon the entire economy. In order to avoid lack of liquidity and therefore a major crisis of the banking system, China adopted a stimulus package through which inserted large amounts of money into the economy in order to stimulate loans. As previous crisis proved, a “credit boom” is dangerous because it eventually leads to a high number of nonperforming loans. Although is effects are visible after a period of time, precautionary measures have to be taken by the monetary authorities to avoid spreading an unhealthy financial system.

Keywords: Banking system; monetary policy; nonperforming loans; crisis (search for similar items in EconPapers)
JEL-codes: G15 G21 H81 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:ovi:oviste:v:xii:y:2012:i:2:p:21-26

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