Sanctions will reinforce Iran’s money supply woes

2018 ◽  
Keyword(s):  
Central Bank ◽  
Money Supply ◽  
Banking Sector ◽  
Banking System ◽  
Content Type ◽  
Better Regulation ◽  
The Government

Significance Inflation has to a great extent been driven by a depreciation of the rial following Washington’s decision to reimpose sanctions, yet deep structural flaws in the banking sector are also to blame. Poor regulation and widespread corruption mean that the Central Bank of Iran (CBI) has for decades created excess money. Impacts Sanctions will distract from the need to enforce better regulation of the banking system. The government will avoid painful reforms, fearing a popular backlash. The CBI will respond to sanctions-related pressures by creating more money.

Bangladesh risks growth by not confronting bad debt

2019 ◽  
Keyword(s):  
Central Bank ◽  
Banking Sector ◽  
Banking System ◽  
Fiscal Year ◽  
Gdp Growth ◽  
Potential Growth ◽  
Content Type ◽  
High Court ◽  
The Government ◽  
Bad Debt

Subject Bad debt in Bangladesh's banking sector. Significance The High Court last month stayed until June 23 a circular issued by the Bangladesh Bank, the central bank, that appeared to benefit borrowers who had defaulted on loans from the country's banking system. Meanwhile, Bangladesh registered 7.9% GDP growth in the fiscal year ending June 2018. Impacts The government will dismiss worries about a potential growth slowdown, pointing to forecast GDP growth of 8.1% in 2018/19. The Bangladesh Bank's circular would hurt banks already burdened with losses because of provisioning against bad debt. Banks may try to reduce their exposure to single borrowers.

scholarly journals Influence of economic freedom and its subcomponents on risk-taking behavior

2019 ◽  
Vol 12 (4) ◽  
pp. 335-356 ◽  
Author(s):  
Rafik Harkati ◽  
Syed Musa Alhabshi ◽  
Salina Kassim
Keyword(s):  
Risk Taking ◽  
Economic Freedom ◽  
Banking Sector ◽  
Banking System ◽  
Islamic Banks ◽  
Content Type ◽  
Economic Freedom Index ◽  
Risk Taking Behavior ◽  
The Government ◽  
Conventional Banks

Purpose The purpose of this paper is to investigate the influence of economic freedom and six relevant subcomponents of it on the risk-taking behavior of banks in the Malaysian dual banking system. It also aims to make a comparative analysis between Islamic and conventional banks operating in this dual banking sector. Moreover, the study is an effort to enrich the existing literature by presenting empirical evidence on the argument that the risk-taking behavior of the two types of banks is indistinguishable given that they operate in the same regulatory environment. Design/methodology/approach Secondary data of all banks operating in the Malaysian banking sector are collected from FitchConnect database, in addition to the economic freedom index from Foundation Heritage for the period 2011–2017. Generalized least squares technique is employed to estimate the influence of economic freedom and the six relevant subcomponents of it on the risk-taking behavior of banks. Findings The level of economic freedom influenced risk-taking behavior within the banking sector as a whole, conventional and Islamic banking sectors negatively during the study period (2011–2017). Risk-taking behavior of conventional and Islamic banks is similar. However, conventional banks turn to be less influenced by economic freedom level as compared to Islamic banks. Practical implications The government and regulators may benefit from the results by rethinking and setting the best economic freedom index that better serves the stability of the banking system, and lessens banks’ risk-taking inclination. Originality/value To the present time, this paper is thought to be of a significant contribution. Given the argument that Islamic and conventional banks behave in the same way. This is one of the first attempts to address this issue in light of the influence of economic freedom and six subcomponents of it on the risk-taking behavior of banks operating in a dual banking system.

Iran’s banking reforms will falter

2017 ◽  
Keyword(s):  
Central Bank ◽  
Dispute Resolution ◽  
Banking Sector ◽  
Banking System ◽  
Banking Reform ◽  
Content Type ◽  
Global Standards ◽  
Central Asian ◽  
European Banks ◽  
Dispute Resolution Mechanism

Subject Iran’s banking sector in urgent need of reform. Significance Tehran's banks face major corruption scandals, and a complex policy environment. In July 2016, the Central Bank of Iran (CBI) announced major plans to reform the country’s banking system in line with global standards. Iranian banks have been cut off from the international financial system since 2012, owing to sanctions. After the 2015 nuclear deal, Iran expected that the lifting of sanctions would reverse this situation. However, despite interest among Central Asian and Turkish banks, progress has been limited. Impacts European banks will be slow to engage with Iran, fearing unpredictable US penalties. Differing US and Iranian interpretations of sanctions lifting under the nuclear deal may come up before the dispute resolution mechanism. Macroeconomic strains will put depreciatory pressure on the currency. If President Hassan Rouhani fails to win re-election in May, the chances of banking reform would be much lower.

Tajik remittance slump will weaken flawed banks

2016 ◽  
Keyword(s):  
Financial Institutions ◽  
Banking Sector ◽  
Banking System ◽  
International Financial Institutions ◽  
Content Type ◽  
Bank Deposits ◽  
The Rich ◽  
The Government ◽  
Main Banks ◽  
Poor Management

Subject Tajikistan's troubled banking sector. Significance Tajikistan's banking system has been in crisis since 2015, as problems in Russia feed through to this remittance-dependent economy. A decline in funds sent home by labour migrants has shrunk bank deposits, and the proportion of non-performing loans has risen sharply. The cash crisis is exacerbated by poor management and cronyism in financial institutions. The main banks, Tojiksodirotbank and Agroinvestbank, have restricted customer withdrawals. Impacts International financial institutions will condition assistance on reforms. However, the government will balk at any reform measures liable to hurt the rich and powerful. The government may seek Chinese support for the banking sector.

Fixing Azerbaijani bank may dent sovereign's image

2017 ◽  
Keyword(s):  
Economic Growth ◽  
Sovereign Debt ◽  
Banking Sector ◽  
Banking System ◽  
The State ◽  
Content Type ◽  
The Government

Significance If two-thirds of creditors agree to the scheme by a July 13 meeting, the government will exchange IBA debt for sovereign loans but it has made it clear it does not bear responsibility for the state-owned bank's liabilities. Impacts Banking sector instability has negative implications for confidence and economic growth. The potential increases in sovereign debt appear manageable. Reducing the size of IBA will bring more competition to the banking system.

scholarly journals Monetary policy collision on the performance of banking sector in India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Belavadi Nikhil ◽  
Shivakumar Deene
Keyword(s):  
Monetary Policy ◽  
Public Sector ◽  
Central Bank ◽  
Interest Rates ◽  
Banking Sector ◽  
Banking System ◽  
Economic Situation ◽  
Content Type ◽  
Public Sector Banks ◽  
The Impact

Purpose The study aims to identify the impact of monetary policy tools on the performance of banks in India, and this could be an excellent suggestion to the regulators in framing the favourable interest rates which would meet the macroeconomic objectives of the Indian economy. Design/methodology/approach The design adopted in this study is descriptive and analytical research. Correlation and regression analysis is used to determine the relationship between bank rate (BR) and the performance of public sector banks in India. The sample chosen for this study is the public sector banks actively performing in India. Findings The performance is measured by taking three factors, and they are deposits, loans and advances (L&A) and total asset value of the banks. All three factors have shown an impact of BR on them during the five years. L&A affected the least amongst the three factors, but the other two were significantly impacted by the change in BR by the Reserve Bank of India. So, there should be a favourable fluctuation in the BR which will bring flexibility in the banking system, and they can perform well in the economy and the central bank also can concentrate on the macro-economic situation in the country. Originality/value This paper helps in giving suggestions to the Central bank, researchers, financial institutions to look into the financial performance and monetary policy rates and the central bank also can concentrate on the macro-economic situation in the country.

Pressure on Iran’s banks raises chances of collapse

2022 ◽  
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Financial Institutions ◽  
Banking Sector ◽  
Task Force ◽  
Banking System ◽  
Reliable Data ◽  
Content Type ◽  
Bank Managers ◽  
Financial Action Task

Significance However, the signs of strain are becoming more marked. On December 15, the Central Bank of Iran (CBI) issued an official warning to all financial institutions, threatening legal penalties for bank managers who try to compensate for rising inflation by offering savers higher interest rates than is legally permitted. Impacts If US sanctions are not lifted, further economic deterioration will increase pressure on the banking system. Iran’s blacklisting by the Financial Action Task Force will be an ongoing burden for the banking sector. Tight credit will make it hard for consumers to get even small loans, such as those for which newlyweds used to be automatically eligible. There are no reliable data, but comprehensive restructuring of the banking system would likely cost hundreds of billions of dollars.

Indian corporations are unlikely to set up banks

2020 ◽  
Keyword(s):  
Public Sector ◽  
Central Bank ◽  
Banking System ◽  
Capital Adequacy ◽  
Content Type ◽  
Public Sector Banks ◽  
The Government ◽  
Set Up ◽  
Bad Debt

Significance The government and central bank are looking for ways to strengthen the country’s banking system, which is beset by low capital adequacy ratios (CARs) and rising non-performing assets (NPAs). India’s leading conglomerates are asset rich, and their profitability is growing. Impacts The RBI will come under pressure to increase regulation of private as well as public sector banks. Many state-owned banks will merge in a bid to reduce their bad debt. Small NBFCs will face a challenge to sustain liquidity.

Australian central bank holds rate as growth slips

2021 ◽  
Keyword(s):  
Economic Growth ◽  
Central Bank ◽  
Interest Rates ◽  
Labour Markets ◽  
Content Type ◽  
Commercial Lenders ◽  
The Government ◽  
Roll Out ◽  
Growth Forecasts

Significance The RBA has cut its growth forecasts amid rising job losses, weakening demand and increasing signs that the latest COVID-19 lockdowns will continue to slow the economy until the pace of the vaccine roll-out programme can be increased. Impacts Although the RBA is independent, the government will hope it keeps rates low ahead of the elections due next year. Commercial lenders could raise interest rates independently of the RBA if inflation remains high. Wage pressures will re-emerge as labour markets tighten but may be mitigated by the extent of underemployment. Economic growth will be uneven across the country in coming months as pandemic-related restrictions vary by location.

Indonesia’s new investment ministry faces headwinds

2021 ◽  
Keyword(s):  
Central Bank ◽  
Foreign Investment ◽  
Short Term ◽  
Sovereign Wealth Fund ◽  
Content Type ◽  
Speed Up ◽  
The Government ◽  
Roll Out

Significance The government hopes greater domestic and foreign investment can help turn around the pandemic-hit economy. The governor of Bank Indonesia (BI), the central bank, last week said GDP should grow by 4.6% in 2021, compared with last year’s 2.1% contraction. Impacts Indonesia will count on private vaccination, whereby companies buy state-procured jabs for their staff, to help speed up its roll-out. The Indonesia Investment Authority, a new sovereign wealth fund, will prioritise attracting more investment into the infrastructure sector. Singapore will continue to be Indonesia’s largest source of FDI in the short term.

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