Non-Performing Loans - New Risks and Policies? NPL Resolution after COVID-19: Main Differences to Previous Crises

Johannes Kasinger; Jan Pieter Krahnen; Steven Ongena; L. Pelizzon; Maik Schmeling; Mark Wahrenburg

Non-Performing Loans - New Risks and Policies? NPL Resolution after COVID-19: Main Differences to Previous Crises

Johannes Kasinger, Jan Pieter Krahnen, Steven Ongena, L. Pelizzon, Maik Schmeling, Mark Wahrenburg

Research output: Other contribution

Abstract

This paper discusses policy implications of a potentialsurge in NPLs due to COVID-19. The study provides an empirical assessment of potential scenarios and draws lessons from previous crises for effective NPL treatment. The paper highlights the importance of early and realistic assessment of loan lossesto avoid adverse incentives for banks. Secondary loan markets would help in this process and further facilitate bank resolution as laid down in the BRRD, which should be uphold even in extreme scenarios. This paper was prepared by the Economic Governance Support Unit (EGOV) at the request of the Committee on Economic and Monetary Affairs (ECON).

Original language	English
Type	Study requested by the ECON committee of the European Parliament
Media of output	Paper
Number of pages	41
Publication status	Published - Mar 2021
Externally published	Yes

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https://www.europarl.europa.eu/RegData/etudes/STUD/2021/651387/IPOL_STU(2021)651387_EN.pdf

Cite this

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title = "Non-Performing Loans - New Risks and Policies? NPL Resolution after COVID-19: Main Differences to Previous Crises",

abstract = "This paper discusses policy implications of a potentialsurge in NPLs due to COVID-19. The study provides an empirical assessment of potential scenarios and draws lessons from previous crises for effective NPL treatment. The paper highlights the importance of early and realistic assessment of loan lossesto avoid adverse incentives for banks. Secondary loan markets would help in this process and further facilitate bank resolution as laid down in the BRRD, which should be uphold even in extreme scenarios. This paper was prepared by the Economic Governance Support Unit (EGOV) at the request of the Committee on Economic and Monetary Affairs (ECON).",

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AU - Kasinger, Johannes

AU - Krahnen, Jan Pieter

AU - Ongena, Steven

AU - Pelizzon, L.

AU - Schmeling, Maik

AU - Wahrenburg, Mark

PY - 2021/3

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N2 - This paper discusses policy implications of a potentialsurge in NPLs due to COVID-19. The study provides an empirical assessment of potential scenarios and draws lessons from previous crises for effective NPL treatment. The paper highlights the importance of early and realistic assessment of loan lossesto avoid adverse incentives for banks. Secondary loan markets would help in this process and further facilitate bank resolution as laid down in the BRRD, which should be uphold even in extreme scenarios. This paper was prepared by the Economic Governance Support Unit (EGOV) at the request of the Committee on Economic and Monetary Affairs (ECON).

AB - This paper discusses policy implications of a potentialsurge in NPLs due to COVID-19. The study provides an empirical assessment of potential scenarios and draws lessons from previous crises for effective NPL treatment. The paper highlights the importance of early and realistic assessment of loan lossesto avoid adverse incentives for banks. Secondary loan markets would help in this process and further facilitate bank resolution as laid down in the BRRD, which should be uphold even in extreme scenarios. This paper was prepared by the Economic Governance Support Unit (EGOV) at the request of the Committee on Economic and Monetary Affairs (ECON).

M3 - Other contribution

ER -

Non-Performing Loans - New Risks and Policies? NPL Resolution after COVID-19: Main Differences to Previous Crises

Abstract

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