Challenging Conventional Wisdom about Non-Performing Loans: A Post-Keynesian Institutionalist Perspective

Abstract

This article addresses the problem of Non-Performing Loans (NPLs) both from a theoretical and policy viewpoint. It is argued that the mainstream literature on the factors affecting NPLs is hardly able to provide an adequate basis for proposing solutions, given the justification it offers to seemingly conflicting hypotheses. On the contrary, a Post-Keynesian Institutionalist perspective provides a realistic comprehensive theoretical explanation and method of inquiry that stresses historical and institutional specificity in guiding successful policies to cope with NPLs.