Nonperforming Loan Disposals Without Resolution

• 成果类型: Article
• 署名作者: Charoenwong, Ben; Miao, Meng; Ruan, Tianyue
• 署名单位: National University of Singapore; Renmin University of China
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.02163
• 发表日期: 2025
• 关键词: nonperforming loan (NPL); NPL disposal; bad bank; troubled bank resolution; banking regulation; Regulatory arbitrage; Financial stability; credit misallocation; Chinese economy

摘要

Using proprietary data on nonperforming loan (NPL) transactions in China, we document that banks conceal NPLs in disposal transactions that are supposed to resolve NPLs. In these transactions, banks provide financing and retain the credit risks and debt collection obligations. Transaction prices contradict underlying credit risks: Despite being delinquent for 4.5 years, the median NPL package is sold at face value with zero haircut. The majority of NPL packages are resold at a premium to banks' non-government-owned borrowers, further supporting the concealment view. Banks under stricter regulation conceal NPLs more and engage in more illicit concealment. NPL-concealing banks increase zombie lending, suggesting that an ineffective resolution exacerbates credit misallocation. Recognizing the hidden NPLs implies the total NPLs in China is two to three times the reported amount.