The obvious answer is that the financial boom preceding the Great Recession left industrial countries with an overhang of debt, and debt, whether on governments, households, or banks, is holding back growth.1 While the remedy may be to write down debt so as to revive demand from the indebted, it is debatable whether additional debt fuelled demand is sustainable in the long run.
The non-performing loan (NPL) ratio was manageable at 3.4 percent as of end-September 2020, slightly higher than the 2.1 percent ratio as of end-September 2019. Loan loss reserves have been generally increasing since the start of this year but inched down as of end-September 2020, resulting to a lower NPL coverage ratio of 91.7 percent.