In order to be a liberal and global economic environment, Taiwan government has been undergoing restructuring on its finane and banking policies since 1991. Subsequently, 16 new banks were established gradually and brought a tremendously competition among banks and other financial institution in Taiwan. According to the statistic of the CBC, loan making is the main business focused among banks. And due to the decreased margin between deposit interest rates and loan rates and the competition among banking institutions, the methods of assessing credit report for loan application is becoming critical. This research is to study a bank in southern Taiwan on the influence of the ¡§Small and Medium Business Credit Guarantee Fund¡¨ mechanism by adapting the statistic method of Logistic Regression. 60 cases were studied, 20 of them, the borrowers were failure to pay as required; 40 cases are in a regu;ar payment bases. The credit rating table of loan-receiving businesses in an effort to determine significant variables affecting loan quality. The study shows that : (1) The longer the term of the loan, the more likely the bank is to encounter overdue payments. In other words, the longer the relationship customer established with bank, the higher risk occurred. (2) The higher the loan rate, the more likely default will occur, which indicates that the bank¡¦s appraisal of the creditor¡¦s risk is a strong affecting loan quality. (3) The higher score of the financial health and industry characteristics, the less likelihood the creditor would fail to make on-time payments. (4) Unit executives are responsible for approving loans; the overdue payment rate was significantly higher when loans are approved by personnel above the level of unit executive. Furthermore, the study also indicate that the assessment items currently using by banks for loan application, these items include corporate capital, loan period, guarantors, repayment style, collateral. Due to current excessively overloaning, the conclusions of this study could be the considerations for bank staff to learn how to stimulate banker¡¦s loan risk management, these findings may serve as an important reference for credit policies and loan business.

Banking industry has been playing a significant role in the process of economic development of Taiwan. There exists an inseparable relationship between its operation quality and the steady growth of national economy. Nevertheless, the drastically increasing numbers of bank in the recent years have caused a vicious competition in this industry. Meanwhile, the global economic recession also leads to the continuous rise of the percentage of nonperforming loans, ever-reducing profit earning as well as the financial chaos and crisis in the banking industry. This study adopts a more reliable efficiency evaluation method------ Data Envelopment Analysis(DEA) to judge the operation performance of banks. Besides, the CCR model and BCC model in DEA (Data Envelopment Analysis) are employed to explore whether the source of low efficiency comes from pure technical efficiency or from scale efficiency. Through slack variable analysis, this study suggests some room of improvement for the input and output of the low-efficiency banks. In view that the percentage of nonperforming loans is one of the essential factors for evaluating the operation performance of banks, this study puts it in the output variable of DEA so as to overcome the paradoxical isotonicity being caused. After verification is made by the study, the results show that it is really workable.

I formally analyze the role of nonperforming loan (NPL) characteristics in explaining NPL profit outcomes compared to the current pricing model for NPLs. I expected that factors included in the current NPL model would not be statistically significant in determining profit outcomes as those factors were considered in determining the purchase price of the asset. Surprisingly, I find that interest rates are statistically significant and negatively correlated with IRR. This is surprising because interest rates are considered in the current NPL pricing model. The results suggest that greater weight should be given to interest rates in determining the purchase price of an asset. Also surprising, I find that properties located in New York are negatively correlated with profitability. State assumption relating to costs and holding timelines are included in the current NPL model. However, the results suggest that additional consideration should be given to properties in New York when determining a purchase price. I also find that delinquent taxes have a slightly positive correlation with NPL Profitability. This was unexpected as delinquent taxes are deducted directly from the purchase price, suggesting a slightly greater significant than their dollar amount.

This thesis overviews and discusses the issue of nonperforming loans in general and in China, and financial sector development from the beginning of Deng Xiaoping's reform era in 1978. The focus is put on the underlying institutional framework as it is found to be one of key contributing factors of NPLs in China. Utilizing a sample of 23 countries over the period 2000-2009, we estimate the impact of macroeconomic determinants on nonperforming loans. One of the regressors, output gap, is estimated via Kalman filtering technique based on the multivariate unobserved component (MUC) method. Consequently, out-of-sample method forecasts for five subgroups of countries, thus providing different benchmarks for China, are compared with official data. The conclusion argues the NPLs ratio to be understated in official statistics, especially towards the end of the series, which might be a sign of increasing macroeconomic instability in China.

Thesis advisor: Zhijie Xiao / This paper attempts to deliver a side-by-side examination of the similarities and differences between the economies of East Asia (Singapore, Taiwan, Hong Kong, Korea Republic, Thailand, Malaysia, Indonesia, and the Philippines) and China. After the devastating 1997 Crisis, many investing eyes have turned to China as the next Asian growth engine. China has been opening its economy to foreign investors and its accession into the World Trade Organization will push for increased transparency and efficiency. The paper discusses the internal and external forces that drove the economies, with focused attention on its financial systems, using pre-crisis data. With foreign banks allowed entry into China by the end of 2006, its financial system will be an important component in economic longevity. Lastly, the question of whether or not China is vulnerable to a crisis is assessed based on the same factors that caused it in East Asia. / Thesis (BA) — Boston College, 2006. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Economics Honors Program. / Discipline: College Honors Program.