Loan Debt Management: The Optimal Strategy Formation

Abstract

Background: Methodological ground for compromise – rent strategy of loan debt management was settled by N.E. Egorova and A.M. Smulov (Businesses and banks: interaction, economic analysis, modeling, 2005). Article takes point of view on compromise – rent strategy as a time-sensitive approach to reduce the volume of bad loans. Aims: We aimed to define the best approach to bad debt management in the volatile economic conditions. Study Design: Analytical review. Place and Duration of Study: CEMI Russian Academy of Sciences, 2013-2015. Methodology: Methodology is based on complex approach which includes analysis of current condition of the banking system, fuzzy sets implementation in possible solutions of bad debt retirement. Results: The authors proposed methodological principles and Economics and Mathematics bad debt management tools on the basis of the approach of the theory of fuzzy numbers, established a set of mathematical equations to reflect the balance between time of the debt retirement, quality of the debt and payment flows. Conclusion: Issues of bad debt prediction are among the most topical at the present stage of development of the global banking system. The complexity of these issues is largely due to the significant uncertainty factors that accompany the processes of crisis and instability in the financial world system.