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

Dimitrios Anastasiou ()

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Non-performing loans; NPL management; bank restructuring; economic policy reform; financial stability; macroprudential policy; poor credit risk management (search for similar items in EconPapers)
JEL-codes: G21 G28 G38 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn and nep-rmg
Date: 2016, Revised 2017
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