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Problem Loan ManagementProblem Loan Management

In: The Practice of Lending

Author

Listed:
  • Terence M. Yhip

    (University of the West Indies)

  • Bijan M. D. Alagheband

    (McMaster University and Hydro One Networks Inc.)

Abstract

This chapter concludes the book with an examination of problem loans, something that is unavoidable in lending and therefore has to be properly managed. The chapter starts with an examination of the costs that a lender faces because of problem loans. The biggest costs are lost principal, lost interest income, and the administrative expenses such as a specialised group and the resources to manage and recover the problem loans. The chapter discusses the reporting structure banks have in place to manage problem loans and the strategies to recover losses (e.g., remarketing the loan, rehabilitation, and liquidation). Also discussed is troubled debt restructuring, the pros and cons of the loan-recovery strategies, debt write-off, loan loss provisioning, and the time-value of money.

Suggested Citation

  • Terence M. Yhip & Bijan M. D. Alagheband, 2020. "Problem Loan ManagementProblem Loan Management," Springer Books, in: The Practice of Lending, chapter 11, pages 431-440, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-32197-0_11
    DOI: 10.1007/978-3-030-32197-0_11
    as

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