NON-PERFORMING LOANS: ANALYSIS AND REGULATION

The analysis of the level of non-performing loans and the volumes of forming the insurance reserves for them with a time lag of 6 years (2004–2009) in developing countries (China, Poland, Russia, Ukraine) was made. The estimation of efficiency of regulatory processes to combat non-performing loans of the banking sector which were applied by these countries was provided. The correlation-regression model of establishing cause-effect relationship between effective index – the share of non-performing loans in the loan portfolio of the banking system and the independent variables was developed and tested. The recommendations on the mechanisms to minimize the amount of non-performing loans were given

The Role of Bank Restructuring in Recovering from Crises: Mexico 1995-98

In this paper we analyze the evolution of the Mexican economy between 1995 and 1998. The remarkable quick recovery seen in aggregate activity has not been uniform across the economy. The tradable sector has grown strongly, while the non-tradable sector has recuperated only sluggishly. This asymmetric response is intimately linked with the severe credit crunch that Mexico has experienced since 1995. Although fresh domestic bank lending dried up, tradable firms obtained financing in the international capital market. This was not the case in the non-tradable sector. A phenomenon that has gone hand in hand with the credit crunch is the steady increase in the share of non-performing loans. We analyze the reasons for this increase, the rationale for the partial bailout policy adopted in 1995, and we investigate why this policy stance did not solve the banking problem. An important lesson is that non-performing loans are unlikely to disappear on their own, even under a high GDP growth scenario. Furthermore, the existence of non-performing loans presents an obstacle for the banking system to adequately perform its functions. This raises the question of whether an alternative strategy under which all non-performing loans were recognized at once and the fiscal costs were all paid up-front would have been preferable.

Classification and management of non-performing loans of Islamic Banks and Conventional Banks : a comparative study

This paper compares the classification and management of non-performing loans between Islamic banks in Malaysia and conventional banks in the UK and Japan. The objective of this paper is to investigate if there are differences in the classification and management of non-performing loans in Islamic banks as a result of the existence of the Investment Account Depositors (IADs). The nature of profit and sharing loss agreement has made the position of IADs in an Islamic bank unique. This uniqueness, however, has posed some degree of risk where in case the bank incurs a loss, the IADs are liable to share this loss. This has made the investment of IADs very risky and is subject to the potential problem of asymmetric information. This paper finds that the Islamic banks define and manage their non-performing loans differently from the conventional banks in the UK and Japan. The analysis shows that even though Islamic banks have special characteristics, the classification and management of its non-performing loans are quite lenient. This is evidenced in the way non-performing loans are defined, the way loss provision is made and the level of disclosure made by an Islamic bank

Dealing with the Bad Loans of the Chinese Banks

Chinese banks suffer from serious financial fragility manifested by high proportions of non-performing loans and low capital-adequacy ratios. A key policy introduced recently by the Chinese government to reduce financial risks is the establishment of four asset management companies (AMCs) for dealing with bad loans. Drawing on the experiences of the Resolution Trust Corporation in the United States and bank restructuring in the Central European transition economies, we argue that the original AMC design will not be successful in resolving the existing non-performing loans (NPLs) nor will it prevent the creation of new bad loans. We recommend a modification of the current proposal that redefines the relationships between the parent banks and the AMCs by transferring the deposits of problem enterprises along with their NPLs from parent banks to AMCs.bad loans, stae-owned banks, asset management companies, China

Analisis Pemberian Dan Pengawasan Kredit Modal Kerja Rekening Koran Untuk Meminimalisir Kredit Bermasalah (Studi Pada PT. Bank Jatim Cabang Bojonegoro Periode 2011 – 2013)

At the time of disrtibuting credit is often found a credit risk. The credit risk is often encountered is the emergence of Non Performing Loans. In order to reduce the credit crunch need for analysis of credit that covers analysis 5C, 7P and 3R and monitoring credit as preventive control of credit and repressive control of credit effectively. PT. Bank Jatim Cabang Bojonegoro is as working capital account for the year 2011 s / d in 2013 the number of Non Performing Loans has fluctuated, where in 2011 s / d in 2012 the value of the Non Performing Loans of 0.06% to 0.01% down to 0.05% and then in 2012 s / d in 2013 the value of the Non Performing Loans of 0.01% to 0.16% increases until 0 , 12%. From these data it can be seen that the PT. Bank Jatim Cabang Bojonegoro is a healthy bank because Non Performing Loans is still far below 5%. Therefore, the distributing and monitoring of credit made by the PT. Bank Jatim Cabang Bojonegoro should be increased up to the percentage of non performing loans can be approached and reached 0% because of the small percentage of non performing loans, therefore the assessment in bank's health will be better

Pengaruh DPK, BI Rate, dan NPL terhadap Penyaluran Kredit Modal Kerja pada BPR di Provinsi Bali Tahun 2009-2014

Rural Bank is one of the banks that serve groups of micro, small, and medium enterprises generally Rural Bank location close to the people. This study aimed to determine the effect of third party funds, the BI rate and non-performing loans to the working capital loan portfolio at Rural Bank in Bali province in 2009-2014 by using multiple linear regression analysis technique. The results showed that the third party fund, BI rate and non-performing loans simultaneously significant effect on working capital loans on Rural Bank in Bali province in 2009-2014, while partially obtained that third party funds, the BI rate and non-performing loans positive and significant impact on working capital loans on Rural Bank in Bali Province 2009-2014. Keywords: working capital loans, third-party funds, the BI rate, non-performing loans

Analisis Perkembangan Kredit Macet pada PT. Bank Mandiri (Persero) Tbk. Unit Kcp Mmu Argamakmur

Ameliana, Repuadi:An Analysis of Non-Performing Loans Development at Mandiri Bank in Argamakmur.This research used quantitative research. Formulation of the problem in this study is how the development of non-performing loans at PT. Bank Mandiri (Persero) Tbk. Unit MMU KCP Argamakmur. And the methods for collecting data are the documentation and observation. And analysis method used quantitative method. In 2012, the development of non-performing loans begun with an amount 79.000.0000 in June until reached the highest non-performing loans in November, 107.000.000. But this case still can be solved by the customers with installment repayment efforts, so in December 2012, the remaining of non-performing loans has shrinkaged in amount 9000.000. Unfortunately, in January 2013, it rose until 111 millions, but the collection efforts and approaches to the customers are still being done, a result of it, is the non-performing loans fell to 19 millions, although in August rose again to 52 millions. From this case indicated that the condition of Bank is still in good criteria because the NPL's value is around 0% to 5%

Profitability Analysis in the Egyptian Banking Sector

The paper is analyzing current problems of the Egyptian banking sector, which is dominated by public banks. The reported problems include a massive proportion of non-performing loans in the banks’ credit portfolios as well as significant profitability problems, especially in the public banks. Some empirical data is gathered using a bank-specific Return on Equity-Analysis. Results support the reported problems and also show some structural weaknesses of both public and private banks.Privatization, non-performing loans, return on equity analysis, banks, Egypt

Risk Preference and Investments Quality as Determinants of Efficiency in the Italian Banking System

The Italian banking system is characterized by deep efficiency inequality between banks operating in different regions, with northern banks that largely outperform the southern ones. Moreover the ratio of non-performing loans to total loans is significantly higher in the South than elsewhere. In view of these evidences we asked: is the effi ciency gap of the southern banks (and therefore their lower screening and monitoring ability) the primary source of their higher level of bad loans? Or is the poorer quality of the southern bank loans (due to the adverse macroeconomic environment) that causes lower efficiency? The results offer rather concrete evidence in favour of the hypothesis that is a lower managerial efficiency which causes an increase in non-performing loans, whereas the eects of exogenous environmental shocks are negligible. As a second point to investigate, we recognize that banks have different risk aversion which differently affects the choice of input vector and we expressly take into account the capitalization degree (as a buffer against the risk) in estimating the bank cost stochastic frontier.

STUDY OF CORRELATION BETWEEN AVERAGE INTEREST RATE AND NON-PERFORMING LOANS IN THE ROMANIAN BANKING SYSTEM DURING 2006- FEBRUARY 2010

This paper aims to examine the correlation between average interest rate and non-performing loans in the Romanian banking system during 2006-February 2010. We based our approach on the Pearson correlation coefficient and we realized an empirical study, which demonstrates how these relevant banking elements are connected. Also, the result of this research suggests that there are other indirect channels which affect the non-performing loans.Pearson correlation coeficient, Non-performing loans, Average interest rate, Credit-risk provisions