Describing a loan or asset that is not generating the expected income, typically because payments are significantly overdue. In banking, loans are usually classified as non-performing when payments are 90 days or more past due.
This modern banking term combines 'non-' (Latin prefix meaning 'not') with 'performing' from Old French 'parfournir' (to accomplish). The specific financial usage emerged in the mid-20th century as banks needed standardized terminology for troubled assets.
Banks use this euphemistic term to avoid saying 'bad loans' or 'failed investments' - it's like calling a broken car 'non-driving'! Non-performing loans are often the first warning sign of broader economic troubles, as they indicate borrowers can't meet their obligations.
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