Approaches of the Bank Loan Portfolio within the Framework of the Financial Crisis

• Author: Bogdan Florin Filip
• Position: Senior Lecturer, PhD, 'Alexandru Ioan Cuza' University of Iasi, Romania
• Pages: 480-488

European Integration - Realities and Perspectives 2012

480

Approaches of the Bank Loan Portfolio

within the Framework of the Financial Crisis

Bogdan Florin Filip

1

Abstract: In this paper, the author proposes himself, first, to define, in his view, a nd to outline the content of

" bank loan portfolio", starting from the requirements of its efficient management, considering that the proper

use of the concept favours the treatment of rel ated issues, both in theoretical and, especially, in banking

practice, for which, there are invoked approaches of this expression cited in ot her works in the foreign and

Romanian scientific literature. Furthermore, it is argued the need and the possibility of the applicative

approaches to b anks' loan portfolios, in terms of quantitative dimensions, but especially from qualitative

perspective, through their structuring on types of loans currently in progress. In this respect, there are

processed and interpreted data that characterize the formation and administration of loan portfolios of

commercial banks in Romania and in other European countries, resulting findings, assessments and

conclusions, having resonances in the theory and practice of banking.

Keywords: lending activity; financial resources; domestic credit; governmental loans; nonperforming loans

JEL classification: G01; G21; H63

1 Introduction

Lending activities performed, in principle, by commercial banks imply manifesting of credit

relationships, between banks, in the position of creditors, which are granting money amounts as loans,

on one hand, and customers of them (l egal entities or individuals), as beneficiaries of the borrowed

money, on the other hand, based on some specific contracts, assumed by both parties. Naturally, this

requires the presence and concurrent conduct of a multitude of credit reports based on contracts,

between the lending banks and the debtor clients, including a great variety of specific elements,

conditions, impact factors and multiple effects.

Therefore, each of the loans granted by a bank has significant distinctive elements in carrying out the

lending processes, banks accumulating claims, which are reflected within loan portfolios of different

sizes, with complex structures, involving, at the same time, a differentiated "exposure" of each one to

the credit risk.

2 Theoretical Approaches

Like other concepts, bank loan portfolio is less approached on theoretical plan, but is used in practice,

with various meanings, aiming the its constitutive elements, as a whole or only some of them, starting,

most times, from context in which this expression is invoked, both in the scientific literature and in the

normative documents. So, for example, in foreign literature, the loan portfolio is conceived as

expression of “loans that have been made or bought and are being held for repayment[…] as major

asset of banks and other lending institutions” (Scott, 2003). Likewise, in other sources it is considered

that, on a general level, the loan portfolio consists in “the loans (in the sense of debt – our comment)

that a lender or a buyer of loans is o wed,[…] listed as an asset on the lender's or investor's balance

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Senior Lecturer, PhD, “ Alexandru Ioan Cuza” University of Iasi, Romania, Faculty of Economics and Business

Administration, 11 Carol Blvd, 700506, Iasi, Romania, Tel:+40 (232) 201000, Fax:+40 (232) 201201, Corresponding author:

bogdan.filip@feaa.uaic.ro