Title: Non-performing debt recovery: effects of the Greek crisis

Authors: A.Z. Marouli; Y.D. Caloghirou; E.N. Giannini

Addresses: Laboratory of Industrial and Energy Economy, National Technical University of Athens, 15780, Greece ' Laboratory of Industrial and Energy Economy, National Technical University of Athens, 15780, Greece ' Eugenia Giannini and Associates Law Office, Athens, Greece

Abstract: A log-normal distribution model is proposed to describe debtors' responses to the available debt collection measures (phone calls, extrajudicial notification, payment orders, and foreclosure). The proposed model was validated by a sample of 170,000 real cases from systemic Greek banks (personal loans and credit cards), and the measure characteristics (the effectiveness, maximum rate of payments, and required time to obtain 50% of the overall collected amount) were estimated. The data depict both the pre-crisis period (2003-2007), which was marked by sustainable economic growth, and the crisis period (2008-2012). Although these results depend on, among other factors, the country characteristics, the time period, the type of debt products used, and the debtors' characteristics, in the absence of relevant published data, these findings are adequate for use in a shortcut estimation of existing non-performing debt portfolios.

Keywords: debt collection; debt recovery; legal measures effectiveness; debt portfolio evaluation; debtor behaviour; recovery rate; loss given default; collection strategies; personal loans; credit cards; Greek crisis; non-performing loans; Greece.

DOI: 10.1504/IJBAAF.2015.070506

International Journal of Banking, Accounting and Finance, 2015 Vol.6 No.1, pp.21 - 36

Accepted: 16 Feb 2015
Published online: 08 Jul 2015 *

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