Loan Assets and Their Importance For Banking Sector – BRD Case Study

Abstract:

Through this paper, we want to present the history of the Romanian banking system from 1989 to the present and demonstrate the existence of a significant relationship between the bank's performance (in terms of profitability) and the quality of the assets (in terms of loan performance).

The quality of the bank's assets is a popular issue in banking literature, as most bank experts have agreed the assumption that, prior to declaring bankruptcy, there must be a significant amount of non-performing loans, as asset quality is an indicator for bank liquidation. The balance sheet of any lending bank confirms that, when loans are not repaid as is often the case, banks are in difficulty, as such debts are sometimes eliminated.