As a consequence of the global financial crisis, high shares of non-performing loans significantly burdened banks' balance sheets, as a result of which financial systems were faced with a long period of recovery. The thesis investigates the factors that influence the deterioration of the credit portfolio and analyses its quality. It establishes the importance of managing non-performing loans by considering the different strategies that banks use to do so. Special emphasis is placed on the analysis of the effects, importance and development of the secondary market of non-performing loans as a key strategy for solving the problem of non-performing exposures and strengthening the stability of the financial system as a whole, considering the current regulatory upgrade in the area of the secondary market of non-performing loans in the European Union. Based on a detailed analysis of domestic and foreign scientific and professional literature and the use of secondary data collected from publicly available databases and statistics of relevant supervisory and other financial institutions, the conclusion is that the developed secondary market of non-performing loans significantly affects the reduction of such loans in banks. By selling loans, the problem is transferred from the banking system, which is regulated, to debt collection agencies and the secondary market of non-performing loans, which are significantly less regulated, and a significant step forward is needed through the improvement of supervision and the upgrading of the regulatory framework in that part, while also keeping in mind consumer protection.