 Using asset management companies to resolve non-performing loans in ChinaJournal of Financial Transformation, 2006, vol. 18, 161-169 Abstract: To address the banking system’s non-performing loan (NPL) problem, the Chinese government set up four asset management corporations (AMCs). They were to buy bad debts from mainly the big four state-owned commercial banks and dispose of them over 10 years, taking a large step towards NPL resolution. So far, these AMCs have made a limited contribution to the resolution of the NPL problem. They have taken over well over half of the NPLs of the big four banks and probably resolved more than half of those acquired. However,under plausible recovery scenarios, the AMC losses would surpass the current financial contributions to the AMCs from both the Ministry of Finance (MoF) and the People’s Bank of China (PBC). This raises the question of who will pay for the AMC losses. Since their cash recoveries have lagged their interest obligations, they also face cash flow pressures. In response, the Chinese government has offered investment banking business licenses as incentives for the AMCs to meet the deadlines and recovery targets of their NPL resolution. Keywords: banking; non-performing loans; asset management companies; China (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ris:jofitr:0942 Access Statistics for this article Journal of Financial Transformation is currently edited by Prof. Shahin Shojai More articles in Journal of Financial Transformation from Capco Institute 77 Water Street, 10th Floor, New York NY 10005. |
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