Non-performing Loans’ Evolution in Romania and Banking Internal Audit’s Role in their Limitation

Author:Univ. prof, PhD Dumitru MATIŞ, Univ. lecturer, PhD Cristina PALFI

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Keywords:internal audit, financial crisis, non-performing loans, credit risc, banking supervision

Abstract:
Due to the latest pronounced crediting expansion in the Romanian banking system, the associated risk became stronger, jeopardizing the portfolio’s quality illustrated by the non-performing loans. \r\nWhat are non-performing loans and how their evolution in Romania looks like? Which are their causes and the main negative implications in the banking system? Which are the warning signals and the most important prevention ways? These are just a few questions at which the authors proposed to find an answer. \r\nIn order to achieve their goals, the authors started a research from the macroeconomic analysis of the Romanian non-performing loans evolution during the latest 14 years and they have been trying to find answers to the above questions basing on the information provided by various credit institutions and presenting at the same time opinions expressed by international organisms regarding the same subject.\r\nAlso, using a study case made upon a sample of credit institutions which are running their activities in Romania, the authors have identified the main measures imposed by banks’ internal audit for managing risks associated to non-performing credits and preventing their future appearance.\r\n

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