Non-performing exposures prevention in Millennium BCP

Abstract

This paper explores the determinants of clients become non-performing. Since the 2008 financial crisis, several member states have been suffering from high levels of non-performing loans, which ultimately has a negative impact on the economies. As a result, ECB and EBA defined strict policies to reduce non-performing loans ratio. Millennium BCP is one of the banks targeted by these policies and, therefore, is trying to implement a factors’ model to prevent clients from becoming non-performing. To perceive whether or not it holds in practice, the model was back tested using a logit model.