{"id":15427,"date":"2021-07-20T09:55:25","date_gmt":"2021-07-20T06:55:25","guid":{"rendered":"https:\/\/modecon.mnau.edu.ua\/?p=15427"},"modified":"2021-07-20T15:04:18","modified_gmt":"2021-07-20T12:04:18","slug":"problem-loans-essence-and-causes","status":"publish","type":"post","link":"https:\/\/modecon.mnau.edu.ua\/en\/problem-loans-essence-and-causes\/","title":{"rendered":"Krukhmal O., Pavlenko L., Tarasenko Y. Problem Loans: Essence and Causes in Modern Conditions"},"content":{"rendered":"

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JEL Classification<\/strong>: G21.<\/i>
\n<\/span><\/td>\n		DOI<\/b>: https:\/\/doi.org\/10.31521\/modecon.V27(2021)-08<\/a><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Krukhmal Olena,<\/b> PhD in Economics, Associate Professor of the Finance, Banking and Insurance Department, Sumy State University, Sumy, Ukraine<\/span><\/p>\n

ORCID ID:<\/strong> 0000-0001-9118-1713<\/span><\/a>
\ne-mail:<\/strong> o.krukhmal@uabs.sumdu.edu.ua<\/span><\/a><\/p>\n

Pavlenko Ludmila, <\/b>PhD in Economics, Associate Professor, Senior lecturer of the Finance, Banking and Insurance Department, Sumy State University, Sumy, Ukraine <\/span><\/p>\n

ORCID ID:<\/strong> 0000-0002-4724-7567<\/span><\/a>
\ne-mail:<\/strong> l.pavlenko@uabs.sumdu.edu.ua<\/span><\/a><\/p>\n

Tarasenko Yarina,<\/b> Applicant for Higher Education, the Educational and Scientific Institute of Business, Economics and Management, Sumy State University, Sumy, Ukraine.<\/span><\/p>\n

ORCID ID:<\/strong> 0000-0003-0095-2821<\/span><\/a>
\ne-mail:<\/strong> tarasenko08052000@gmail.com<\/span><\/a><\/p>\n

 <\/p>\n

Problem Loans: Essence and Causes in Modern Conditions<\/h2>\n

 <\/p>\n

Abstract. Introduction.<\/strong> The article is devoted to the analysis of the current state of problem loans and the reasons for their occurrence in banks in modern conditions. The emergence of bad debts is due, firstly, to the negative impact of the economic crisis, and secondly, the lack of willingness of borrowers to make payments and errors in the credit policy of banks. A detailed study of the causes of problem loans makes it possible to reduce the negative impact of both external and internal factors.<\/p>\n

Purpose.<\/strong> The article defines the essence of the concept of “problem credit”, classifies problem loans, and identifies the main causes of bad credit.<\/p>\n

Results.<\/strong> The authors’ approaches to the selection and classification of factors for the occurrence of problem loans have been analyzed and it has been determined that it is appropriate to divide the factors into internal and external in terms of the bank’s ability to influence or limit the influence of the factor. The dynamics of the volume and share of problem loans in the banking system of Ukraine has been also analyzed and it has been determined that the share of problem loans in the portfolios of Ukrainian banks has been declining in recent years due to write-offs of non-performing loans from which banks do not expect income.<\/p>\n

Conclusions.<\/strong> The authors prove the existence of the definition of \u201cproblem loan\u201d as well as the concepts a non-performing loan, an impaired loan, a defaulted loan. A detailed study of both external and internal causes of problem loans will identify the necessary areas for improving approaches to planning, organization and control of lending in banks. It is important for banks to eliminate internal causes. Changes in external factors should be used to forecast problem loans and identify tools for preventive management.<\/p>\n

Keywords: <\/b>problem loans; NPLs, non-performing loans; credit debt; banking system; loan portfolio.
\n<\/b>
\n<\/b><\/p>\n

References:<\/strong><\/p>\n

    \n
  1. On banks and banking activities : Law of Ukraine of December 7, 2000 \u2116 2121-III. Retrieved from : <\/span>https:\/\/zakon.rada.gov.ua\/laws\/show\/2121-14<\/span> [in Ukrainian].<\/span><\/li>\n
  2. Official site of the Verkhovna Rada of Ukraine. Retrieved from : https:\/\/zakon.rada.gov.ua\/laws\/show\/929_015#Text [in Ukrainian].<\/span><\/li>\n
  3. International Financial Reporting Standards, paragraphs 58, 59 of IAS 39 \u201cFinancial Instruments: Recognition and Measurement\u201d. Retrieved from : http:\/\/ec.europa.eu\/internal_market\/accounting\/docs\/consolidated\/ias39_en.pdf [in English].<\/span><\/li>\n
  4. Guidance to banks on non-performing loans. ECB 2017. Retrieved from : https:\/\/www.bankingsupervision.europa.eu\/ecb\/pub\/pdf\/guidance_on_npl.en.pd [in English].<\/span><\/li>\n
  5. Regulation (EU) No 575\/2013 of 26 June 2013 on prudential requirements for credit institutions and investment firms. Retrieved from : <\/span>http:\/\/eur-lex.europa.eu\/legal-content\/en\/TXT\/?uri=celex%3A32013R0575<\/span> [in English].<\/span><\/li>\n
  6. Regulation (EU) No 680\/2014 – Implementing Technical Standards (ITS) on supervisory reporting of institutions (as amended). EBA 2014 Retrieved from : https:\/\/www.eba.europa.eu\/regulation-and-policy\/supervisory-reporting\/implementing-technical-standard-on- supervisory-reporting \/ – \/ regulatory-activity \/ press-release [in English].<\/span><\/li>\n
  7. Guidance on Prudential treatment of problem assets – definitions of non-performing exposures and forbearance. BCBS 2017. Retrieved from : <\/span>http:\/\/www.bis.org\/bcbs\/publ\/d403.pdf<\/span> [in English].<\/span><\/li>\n
  8. Official site of the International Monetary Fund. Retrieved from : <\/span>https:\/\/www.imf.org\/en<\/span> [in Ukrainian].<\/span><\/li>\n
  9. Kloba, V. L. (2009). Situational center for settlement of problem debts, Regional Economy, 4, 95\u2013100.<\/span><\/li>\n
  10. Denisenko \u041c. \u0420., Domrachev, V. M. &\u00a0 Kabanov, V. G. (2008). Lending and risks. K .: VD Professional. [in Ukrainian].<\/span><\/li>\n
  11. Osokina, \u0422. \u041c. Accounting in banks. \u041c. \u041c\u0406\u0415\u041c\u041f2010. 148 s. [in Russ].<\/span><\/li>\n
  12. Trishak, L. S.\u00a0 & Savchin, L. M. (2017). <\/span>Credit management<\/span><\/i> : a workshop on the course. LM Ivano-Frankivsk. [in Ukrainian].<\/span><\/li>\n
  13. Salo, I. V. & Krikliy \u041e. \u0410. (2007). <\/span>Financial management of the bank. <\/span><\/i>Sumy : VTD \u00abUniversity Book\u00bb [in Ukrainian].<\/span><\/li>\n
  14. On approval of the Regulations on the organization of the process of management of problem assets in banks of Ukraine : Resolution of the Board of the National Bank of Ukraine dated 18.07.2019, \u2116 97. Date of update: 18.04.2020 Retrieved from : https:\/\/zakon.rada.gov.ua\/laws\/ show \/ v0097500-19 # Text [in Ukrainian].<\/span><\/li>\n
  15. Yaremenko, O. R. & Kostylova, \u041e. \u041c. (2016). Problem loans of banks : defining the nature and trends of their development in the banking crisis. Grosh\u0456, f\u0456nansi \u0456 kredit, 10, 900-905 [in Ukrainian].<\/span><\/li>\n
  16. Klymenko, D. B. (2016). Opportunities of banks to work with problem loans. <\/span>Zb\u0456rnik naukovih prac’ Un\u0456versitetu derzhavno\u0457 f\u0456skal’no\u0457 sluzhbi Ukra\u0457ni, <\/span><\/i>2, 132-143 [in Ukrainian].<\/span><\/li>\n
  17. New approaches of the NBU to the definition of non-performing assets \/ loans: National Bank of Ukraine. Retrieved from : <\/span>https:\/\/bank.gov.ua<\/span> [in Ukrainian].<\/span><\/li>\n
  18. Official site of the National Bank of Ukraine. Financial Stability Report. Retrieved from : <\/span>https:\/\/bank.gov.ua\/ua\/stability\/report<\/span> [in Ukrainian].<\/span><\/li>\n<\/ol>\n

    [\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]Received: <\/strong>07 May 2021<\/span><\/strong><\/p>\n

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    Krukhmal O., Pavlenko L., Tarasenko Y. (2021). Problem Loans: Essence and Causes in Modern Conditions. Modern Economics<\/em>, 27(2021), 61-69. DOI: https:\/\/doi.org\/10.31521\/modecon.V27(2021)-08.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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    [vc_row][vc_column][vc_column_text] JEL Classification: G21. DOI: https:\/\/doi.org\/10.31521\/modecon.V27(2021)-08 [\/vc_column_text][vc_column_text] Krukhmal Olena, PhD in Economics, Associate Professor of the Finance, Banking and Insurance Department, Sumy State University, Sumy, Ukraine ORCID ID: 0000-0001-9118-1713 e-mail: o.krukhmal@uabs.sumdu.edu.ua Pavlenko Ludmila, PhD in Economics, Associate Professor, Senior lecturer of the Finance, Banking and Insurance Department, Sumy State University, Sumy, Ukraine ORCID ID: 0000-0002-4724-7567
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