Chinese banks probably concealing NPLs – Finnish paper

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Chinese banks are likely to have a greater proportion of non-performing loans (NPLs) than official figures report, a working paper published by the Bank of Finland argues.

In The vanishing interest income of Chinese banks, Karlo Kauko attempts to calculate what Chinese banks should be earning from their loan portfolios, and compares it to the reported figures. He uses stochastic frontier analysis to estimate the interest income that a hypothetical profit-maximising Chinese bank would make if it

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