Decision Making of Employees for Selecting Debt Restructuring Methods of Real Estate Non-Performing Loan : A Case Study of Bangkok Commercial Asset Management (BAM) PLC

Abstract

Bangkok Commercial Asset Management Pubic Company Limited (BAM) has methods to manage non-performing loan (NPL) and aims to alleviate its debtors’ NPL to return them to be good performing loan and to help them regain the ownership of their property. The objective of this research is to study the decision making process of BAM Head Office’s employees Asset Management Department for selecting debt restructuring methods of real estate non-performing loan (NPL). The study applies statistical methodology using 127 survey samplings of the employees.

The results of the study show that the most three frequent used methods are method 1 – extension of loan payment period, method 4 – principle or outstanding interest reduction, and method 3 – interest rate reduction. These three methods mainly help the debtors to reduce the monthly installment burden. The factors that mainly influent the decision making process are (1) income of the debtor (2) remaining loan outstanding and (3) debt-to-income ratio

The study found that almost all of the methods to resolve real estate non-performing loan (NPL) problems are to improve debtors’ ability to repay the loan which depends on each individual profile, and to return the debtors back to the normal status in order to have accessibility to financial supports from financial institutes once again. This study is expected to be useful for other financial institutes in the future to increase the methods effectiveness on managing real estate non-performing loan (NPL).