In prior studies we projected the development of the ratio of non-performing loans to total loans (NPL Ratio) under different macroeconomic scenarios in many countries in the aftermath of the corona pandemic (NPLM 2020). More recently, we investigated the impact of high inflation on NPL Ratios after Russia’s invasion of the Ukraine and the resulting increase in energy prices and other consumer prices (NPLM 2022a).
In this note, we update our forecasts of NPL Ratios in many countries based on the most recent macroeconomic scenarios of the World Economic Outlook published by the IMF in October 2022 (IMF 2022). We mainly focus on Asia and report on the recently published roadmap of the Asian Development Bank to develop an online platform to trade NPL in Asia and the Pacific (ADB 2022). The online trading platform is proposed as a tool to help countries in the region to more efficiently tackle the expected buildup of NPLs as the macroeconomic environment cools, credit risk increases and with it the risk of financial crisis.
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Updated NPL Ratios and Developing an NPL Transaction Platform in Asia .