Methods of Regulating Non-performing Loans. The Challenge for Greece

When an economy faces financial crisis, a secondary problem occurs regarding the management of Non-performing Exposures. According to EBA and BoG, several restructuring methods have been created in order to address this problem. This paper aims to analyze all the possible methods, creating at the same time a methodology to pick the best method for each case. Using sensitivity analysis on the impact of the restructuring methods to the financial ratios of the firms we analyzed, we concluded to a technique of choosing the most appropriate method for each case. This paper has practical implications, since its findings can help distressed businesses that face liquidity, solvency and productivity problem to choose the most appropriate restructuring method in order to face financial healthier conditions, which at the moment doesn’t exist.