Problem Loan ManagementProblem Loan Management

Terence M. Yhip and Bijan M. D. Alagheband
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Terence M. Yhip: University of the West Indies
Bijan M. D. Alagheband: McMaster University and Hydro One Networks Inc.

Chapter 11 in The Practice of Lending, 2020, pp 431-440 from Springer

Abstract: Abstract This chapter concludes the book with an examination of problem loans, something that is unavoidable in lending and therefore has to be properly managed. The chapter starts with an examination of the costs that a lender faces because of problem loans. The biggest costs are lost principal, lost interest income, and the administrative expenses such as a specialised group and the resources to manage and recover the problem loans. The chapter discusses the reporting structure banks have in place to manage problem loans and the strategies to recover losses (e.g., remarketing the loan, rehabilitation, and liquidation). Also discussed is troubled debt restructuring, the pros and cons of the loan-recovery strategies, debt write-off, loan loss provisioning, and the time-value of money.

Keywords: Problem loans; Strategies to recover losses; Debt write-off; Loan loss provisioning; Time-value of money (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-32197-0_11

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DOI: 10.1007/978-3-030-32197-0_11

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