A Study on the Solutions to Non-Performing Loans in Taiwan
Date Issued
2015
Date
2015
Author(s)
Shih, Yi-Ting
Abstract
A major part of the banking business is lending. A rise in the non-performing loans often lead to the financial crisis. Thus how to deal with and prevent the non-performing loans are crucial issue. After liberalization in the Taiwan financial market in the 1990s, and other factors caused narrowing spread faced by the financial institutions, resulted in an increase in the non-performing loans, seriously affect the financial institutions’ financial stability. Taiwanese government introduced the financial exit mechanism from the United States, by use the Deposit Insurance System and Resolution Trust Corporation to inject funding, and transfer the non-performing loans Asset Management Corporation, in order to strengthen the financial stability. This study discuss Taiwan’s deposit insurance system, and Resolution Trust Corporation, and compared with US, Japan and Korea’s systems. The study shows with asset management corporations, financial holdings’ profitability and asset quality both resulted in positive growth. The RTC and AMC systems introduced by Taiwan government, are effective in dealing with non-performing loans, as shown by the macroeconomic indicators. Finally the study provide for recommendations for the financial regulatory authority, in order to achieve the goal of financial stability.
Subjects
Non-performing Loan
Exit Mechanism
Deposit Insurance System
Resolution Trust Corporation
Asset Management Corporation
Type
thesis