Significant institutional reforms have been implemented, aiming at providing banks with a variety of means for reducing non-performing loans. These reforms include, among others, the authorization of credit servicing firms, operation of an electronic platform for out-of-court settlement, and electronic auctions of real estate.
Of course, when banks originate and hold loans, they internalize the costs of their own underwriting standards, and so have strong incentives to screen borrowers and enforce contractual covenants, as appropriate. 5 Investment banks also served important roles in financial intermediation. Somewhat unlike commercial banks, investment banks traditionally acted more as agents, distributing, rather than holding, most of their resulting exposures.