The end result has been a vicious circle of continuous and sharp falls in property prices, bank lending and aggregate demand, and rising loan losses and unemployment which has now lasted more than five years.
Their management should aim at maximising the probability that these loans become performing again. On the one hand, significant benefits could be obtained if non-financial firms, where necessary with the collaboration of banks, resorted to specialised operators such as “turnaround funds”, able to provide the knowledge and resources to relaunch impaired enterprises.