Time on the market and sale price of non-performing loan assets

Abstract

The correlation between time on the market (TOM) and offer price or transaction price has been analyzed in a number of studies. Unlike previous studies, this paper focuses on atypical property (non-performing assets (NPAs)) and adopts a two-stage least squares regression (2SLS) model to test whether value enhancement strategies would enhance the disposal price in Kaohsiung city. The empirical results show that investors can’t profit just from increasing the time on the market (TOM). Investors have to adopt an enhancement strategy to increase NPA value as well. This is the important finding from the comparison of auction and value enhancement strategy in this paper. The Taiwanese experience reported in this paper shows that value increment can be achieved via the combination of longer TOM and value enhancement strategy.