PROVISIONING SPECIFIC CREDIT RISK, THE MAJOR PROBLEM OF THE ROMANIAN BANKING SYSTEM

Dana Sisea and Valeria Arina Balaceanu ()

No 8, Post-Crisis Trends - Working papers from Ecological University of Bucharest, Department of Economics

Abstract: Banking system, the financial system representative component delineates the decisive role that rests in financing the real economy and population. It is known that in almost all countries significant funds from bank loans companies. This situation is typical and the United States, the country where the grant funds can be easily raised. The role of banks in general and its lending activity in particular are both crucial for both developed economies and emerging economies, among which that of Romania, because they ensure continuous operation and efficiency. This goal but finds realization in terms of default risk materializes when they become nonperforming loans (non-performing loans - NPL), generating losses recoverable value. In order to cover these losses, banks are required to apply appropriate risk management arrangements. Between them enrol and specific credit risk provisioning problem quasi-general and permanent nature of the banking system in Romania.

Keywords: credit risk provisions; non-performing loans; financial intermediation; substandard loans; debt service; principle decommissioning contamination (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Pages: 7 pages
Date: 2014-01
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Published in Economics of Sustainable Development - Post-Crisis Trends, ISBN: 978-606-652-060-7, March 2014, pages 65-71

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