Yet NPLs have remained stubbornly high. The banks’ responses to the NPL problem have disappointed, in the same way as the Irish banks’ initial responses did. Issues regarding recognition and provisioning for NPLs persisted. Strategies and capability for dealing with them were inadequate. Individually, banks did not appear sufficiently incentivised to address the problem. Furthermore, structural issues in different jurisdictions were causing significant issues.
This resistance has been a problem in industrialized countries (it was, for example, an important factor in the U.S. savings and loan debacle of the 1980s), 4 but the problem is far worse in many emerging-market countries.