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In addition to deal with the issue of bad debts, the core issue of financial reform is how to resolve the serious non-erforming loans effectively. This study, first of all, aims to discover all potential problems resulted in the increase of non-performing loans from the very beginning. And then from the bank's point of view, the current credit-rating managerial system will be reviewed, addressing the topic of the risk analysis of creditors. It will be crucial to find out whether the currently risk analysis system is still effective to be put into practice under today’s environment. Finally, the study will dedicate to the solutions of solving the problem of non-performing loans.
This study formulated five main variables - the banking system, the credit-rating experiences of credit-rating administrators, the education background, gender, and the lever of authority - to analyze the above issues and scrutinize whether the differentiation view is exist among the variables. After sampling 47 domestic banks and mailing out 235 questionnaires, this study presented a detailed analysis of its result with collected effective 201 questionnaires or 85.5% of questionnaires, which were processed by SAS software and SPSS software. Statistical data analysis included descriptive analysis, correlation analysis, and reliability analysis, and the results are as follows:
1.Instead of focusing on those factors which can not be controlled by the bank, such as the economic recession, the depreciation of the collateral, the over-investment of the loaner, and the sustained higher unemployment rate, the bank should take the initiative in improving its credit rating system.
2.In terms of credit-rating indicators, banks will be most concerned about the shareholder & the management team for the business customers. Instead, the level of warrant will be the most important factor concerned by the bank for its individual customers.
3.Due to the complexity of debt collection process in practice and the obscure law articles, coupled with the fact that most of bank officers do not graduate from law schools, how to enhance the debt collectors’ law knowledge through either on-the-job training or self-study will be a critical and fundamental issue to reduce the non-perform loans.
4.Most of the banks prefer negotiating with the overdue loaners for possible reimbursement. Besides, both enhance financial audit and enforce financial scrutiny have higher preference from the banks. By contrast, the approaches for resolving the non-performing loans through Asset Management Corporation (AMC), RTC, and Financial Asset Security do not be adopted by the banks.
5.Regarding the disposing of the collateral of non-performing loans, most banks still rely on the auction of the law-court although it usually takes a tedious process. However, the AMC authorized by the Taipei Local Law-curt can help to supplement the deficiency in the banks’ auction process. As a result, in order to speed up the process of disposing non-performing loans, AMC has been penetrating the auction market successfully.
Key words: Non-performing loans, Credit-rating indicators, Debt collection management
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