A Remedy Framework in the Resolution of
Non-performing Loans

Demetriou, Demetra

Volume 25, Numbers 3 & 4 / September/December ,

A Remedy Framework in the Resolution of Non-performing Loans

Multinational Finance Journal, 2021, vol. 25, no. 3/4, pp. 219-245

Demetra Demetriou , Neapolis University Pafos, Cyprus Corresponding Author

Abstract:
The aim of the paper is to stimulate the discussion around the recent increase in NPLs across several industrial countries by proposing a remedy framework for the resolution of non-performing loans (NPLs). The framework focuses on providing a reprieve to borrowers until they can recover financially and regain the ability to service their loans. In this respect, this paper proposes the establishment of a state-owned asset management company and attempts to find a balance between incentivizing the participation of banks regarding the disposal of NPLs and limiting risks to the state while avoiding moral hazard situations.

Keywords : Non-performing loans (NPLs); remedy framework; asset management company; lending behavior; moral hazards
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