Non performing loans in the sandbox

It has recently been argued that high non-performing loan stocks can limit banks’ lending ability, and thus impair the effectiveness of monetary policy. This column questions this claim and argues for a more nuanced view. It points to the lack of a serious theoretical analysis of the relationship between non-performing loan stocks and credit dynamics. Policy should focus on maximising the ‘cure rate’ rather than eliminating non-performing loans entirely.

Bankruptcy in a cash advance goes to   a crawl back queue, and notaries do reversals at high cost. When the default queue is stable, it is priced, observable  and all parties share risk.  What the notaries do to resole rollbacks is a specialized field, in need of a start up. Bankruptcy and prequals obviously related.