Problem Loan Ratio

AAA

DEFINITION of 'Problem Loan Ratio'

A ratio in the banking industry that denotes the percentage of problem loans to sound ones. The problem loan ratio is ultimately a measure of the health of the banking and lending industries and the economy. A higher ratio means a greater number of problem loans and vice-versa.

INVESTOPEDIA EXPLAINS 'Problem Loan Ratio'

The problem loan ratio can be broken down by the level of delinquency of loans, such as those less than 90 days past due versus those more severely in arrears. This ratio increased across the board during the 2007-2009 recession and subprime fallout. This ratio can apply to specific banks, bank branches or the industry as a whole.

RELATED TERMS
  1. Problem Loan

    In the banking industry, a problem loan is one of two things; ...
  2. Credit History

    A record of a consumer's ability to repay debts and demonstrated ...
  3. Credit Card

    A card issued by a financial company giving the holder an option ...
  4. Credit Score

    A statistically derived numeric expression of a person's creditworthiness ...
  5. Loan

    The act of giving money, property or other material goods to ...
  6. Credit

    1. A contractual agreement in which a borrower receives something ...
RELATED FAQS
  1. What is the difference between a write-off and a writedown?

    In terms of accounting, a write-down is performed to reduce the value of an asset to offset a loss or expense. A write-down ... Read Full Answer >>
  2. What are some good online resources for me to learn about Generally Accepted Accounting ...

    The two definitive authorities on developing and interpreting the U.S. generally accepted accounting principles, or GAAP, ... Read Full Answer >>
  3. How do you calculate shareholder equity?

    Shareholders' equity is listed on a company's balance sheet and measures its net worth. A company's shareholders' equity ... Read Full Answer >>
  4. What is the difference between earnings and profit?

    Earnings, specifically retained earnings, and profit are often used as synonyms in corporate finance, although they are different ... Read Full Answer >>
  5. How is minimum transfer price calculated?

    A company that transfers goods between multiple divisions needs to establish a transfer price so that each division can track ... Read Full Answer >>
  6. What is the effective interest method of amortization?

    The effective interest method is an accounting practice used for discounting a bond. This method is used for bonds sold at ... Read Full Answer >>
Related Articles
  1. Retirement

    Borrowing From Your Retirement Plan

    Left with no alternative but to take money out from your retirement savings? Here are some guidelines.
  2. Credit & Loans

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  3. Credit & Loans

    Check Your Credit Report

    Make sure there are no errors holding you back from obtaining a loan.
  4. Personal Finance

    Avoiding Foreclosure Scams

    If you want to save your home, avoid bogus offers and take matters into your own hands.
  5. Personal Finance

    Promissory Notes: Not Your Average IOU

    These may be a handy way to borrow money, but this convenience does not come without risk.
  6. Home & Auto

    Reverse Mortgage Pitfalls

    Before tapping your home equity, find out what can go wrong.
  7. Options & Futures

    Payday Loans Don't Pay

    Hold too tightly to this rescue line and you'll soon be drowning in debt.
  8. Options & Futures

    Saving Your Home From Foreclosure

    Learn the tactics you can use to prevent your home from being repossessed.
  9. Options & Futures

    Different Needs, Different Loans

    Find out what options are available when it comes to borrowing money.
  10. Savings

    Explaining Term Deposits

    A term deposit (more often called a certificate of deposit or CD) is a deposit account that is made for a specific period of time.

You May Also Like

Hot Definitions
  1. Radner Equilibrium

    A theory suggesting that if economic decision makers have unlimited computational capacity for choice among strategies, then ...
  2. Inbound Cash Flow

    Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow ...
  3. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  4. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  5. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  6. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!