The rapid growth of credit over the last two decades has led to increased levels of non-performing loans across the globe. This can reduce lending and hamper economic recovery, creating a vicious circle that can be difficult to break. However, robust distressed assets markets can interrupt this loop, allowing for a return to financial stability and economic growth. IFC, through its Distressed Asset Recovery Program (DARP), is taking the lead in developing strong distressed assets markets in emerging economies.
This report provides an overview of DARP, examines the legal framework necessary to develop distressed assets markets, and explores how public asset management companies can facilitate private sector involvement. It also analyzes six markets—Brazil, China, Greece, India, Turkey, and Ukraine—where preconditions for distressed assets markets have been or are being put in place. This provides opportunities that are both attractive for investors and beneficial for borrowers—individuals and businesses—and for financial institutions in these markets.