Publication Details
Abstract
This paper conducts a detailed summary of international experiences to improve asset management efficiency in commercial banks, with special focus on the functions as well as influences of NPLs on bank asset quality. The research tries to identify how different proportions of problem loans in the structure of a loan portfolio will influence commercial banks' main indicators: liquidity, profitability, and the overall financial health. High level of non-performing loans is mentioned as one of the key impediments for an efficient asset management and influences banks’ lending capability, credit risk condition and confidences in the banking system. The study analyses the direct and indirect consequences of a growing share of problem loans in bank balance sheet which negatively influences capital adequacy, income generation and risk development. Particular interest focuses on the connection between asset quality deterioration and financial system stability, especially in times of economic distress. The article highlights that mismanagement of bank assets can aggravate systemic risks and restrain sustainable economic growth. In addition, the research examines successful global practices and policies introduced by developed and emerging economies to manage non-performing loans.