During business operation, if financial institutions fail to timely identify the problematic financial asset, set up special loan loss provisions to write off bad loans, or stop accruing relevant interests, there will be serious problems ahead.
According to the balance sheet, asset quality of China’s banking institutions has been enhanced in recent years, with the absolute amount and ratio of non-performing loans declining, which could be attributed to the supervisors strengthening regulation and the financial institutions deepening reform to improve internal management.