Disposal of Non-performing Assets vs. Bank Characteristics

• Main Authors: Chiu, Wu-Ping, 邱梧萍
• Other Authors: Lee, Pei-Hsuan
• Format: Others
• Language: en_US
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/43624849688072194578

碩士 === 國立中正大學 === 財務金融研究所 === 99 === According to previous research, different disposal methods had different influences on banks’ stock price and investors’ long-term returns. While banks make their disposal decisions of adopting which method to deal with their non-performing loans, they are actually sending some signals to investors. What are the critical factors having effects on adopting different methods to dispose of NPLs for banks? Therefore, this study explores the critical factors which have effects on adopting different methods to dispose of NPLs for banks. By realizing the critical factors which have effects on banks’ disposal decisions, investors can expect banks’ disposal decisions in advance and how their wealth will be influenced. In our study, we only focus on two disposal approaches, i.e. loan sales and collateral sales. We use transactions occurred between 2001 and 2009 as our sample. In our research, we explore the influential effects from five aspects, management ability, profitability, liquidity, leverage level, and market power. This paper finds that banks’ management ability, profitability, and market power have significant influence for banks on choosing the method to dispose their NPLs.