%0 Journal Article
%T Bank Non-Performing Loans (NPLS): A Dynamic Model and Analysis in China
%A Shihong Zeng
%J Modern Economy
%P 100-110
%@ 2152-7261
%D 2012
%I Scientific Research Publishing
%R 10.4236/me.2012.31014
%X In this paper we report on a utility function (loss function) and model that we designed by using optimal control theory based on previous studies. we found that: (1) the Hamiltonian multiplier of the bank NPLs growth rate in the model was obtained using the negative derivitive of the utility (defined as loan function minus non-performing loan function) with respect to the NPLs multiplied by a factor which expresses the rate of change in NPLs over time with respect to the NPLs, the formula is ¦Ë<sub>N</sub>=(1/¦Ä)(-vmN<sub>m-1</sub>)=(1/¦Ä)U<sub>'</sub>; (2) the model determines the equilibrium value of the saddle point of the bank NPLs; (3) the model can explain the NPLS phenomenon in the Chinese banking system as mainly significant in the state owned banks (SOBS); (4) The paper supports the following hypothesis by considering the situation in China: the equilibrium value of the bank NPLs is dependent on micro-economic factors but influenced by macro-economic factors.
%K Bank Non-Performing Loans
%K Finance Frangibility
%K Chinese Banking System
%U http://www.scirp.org/journal/PaperInformation.aspx?PaperID=16795