A study for the evaluation of provision allocation to non performing loans of banks in western countries and in Turkey and the extent of non performing loans in Turkish banking system

Abstract

The purpose of this study is to evaluatethe Government Decree put in force on May 23,identification of non-performing loans of banksallocation of provisions for such loans.the success of1988 for thein Turkey andIn this study, after a brief description of bankingsystem and non-performing loans, a detailed explanation has beenprovided for allocation of provision to such loans. Then, furtherto explanations of provision allocation to non-performing loans inWestern Countries and in Turkey, a comparison of them has beencarried out. To see the impact of the new application on the banks,an overview of Turkey's all (59) banks' balance sheets and incomestatements for the related accounts of non-performing loans andprovisions is performed.In the second part, a research has been carried out viaa questionnaire, with the loan department executives of theselected 15 --banks (representing the Turkish Banking System), fordetermination of the extent of non-performing loans and evaluationthe success of the Government Decree. The suggestions of theexecutive persons who are in the business are also included in thispart.I hope this study will serve as an introductory sourcefor the ones wishing to search on the subject of the reasons ofnon-performing loans.