Non-performing debt recovery: effects of the Greek crisis

Abstract

A log-normal distribution model is proposed to describe debtors' responses to the available debt collection measures (phone calls, extrajudicial notification, payment orders, and foreclosure). The proposed model was validated by a sample of 170,000 real cases from systemic Greek banks (personal loans and credit cards), and the measure characteristics (the effectiveness, maximum rate of payments, and required time to obtain 50% of the overall collected amount) were estimated. The data depict both the pre-crisis period (2003-2007), which was marked by sustainable economic growth, and the crisis period (2008-2012). Although these results depend on, among other factors, the country characteristics, the time period, the type of debt products used, and the debtors' characteristics, in the absence of relevant published data, these findings are adequate for use in a shortcut estimation of existing non-performing debt portfolios.