scholarly journals The Impact of Nonperforming Loans on Cross-Border Bank Lending: Implications for Emerging Market Economies

2020 ◽  
Author(s):  
Cyn-Young Park ◽  
◽  
Kwanho Shin ◽  
Keyword(s):  
Emerging Market ◽  
Bank Lending ◽  
Emerging Market Economies ◽  
Market Economies ◽  
Nonperforming Loans ◽  
Cross Border ◽  
The Impact

Research Insights: How Can Macro-Prudential Policy Control the Impact of Cross-Border Bank Flows on Emerging Market Economies?

2021 ◽  
Author(s):  
Gabriel Cuadra ◽  
Victoria Nuguer
Keyword(s):  
Labor Market ◽  
Economic Crisis ◽  
Emerging Market ◽  
Emerging Market Economies ◽  
Market Economies ◽  
Cross Border ◽  
Advanced Economies ◽  
Policy Control ◽  
The Impact ◽  
Prudential Policy

Advanced economies (AEs) transmit economic crisis to Emerging Market Economies (EMEs) through cross-border bank flows, impacting their output, credit, and assets prices. Empirical evidence suggests that the transmission of the crisis from AEs to EMEs is higher in the absence of macro-prudential policy. A macro-prudential policy in the form of a levy on EMEs banks, when credit grows faster than deposits, reduces the propagation of AEs crisis to EMEs: the consumption drop is 12 percent lower, and the reaction of the labor market smoother, so consumers are better off with the policy than without it.

scholarly journals Liquidity regulations and bank behavior: An emerging markets perspective

2021 ◽  
Vol 10 (4, special issue) ◽  
pp. 194-211
Author(s):  
Tafirei Mashamba
Keyword(s):  
Emerging Markets ◽  
Global Financial Crisis ◽  
Emerging Market ◽  
Generalized Method Of Moments ◽  
Emerging Market Economies ◽  
Basel Iii ◽  
Market Economies ◽  
Coverage Ratio ◽  
The Impact

The 2007 to 2009 global financial crisis significantly affected the funding structures of banks, especially internationally active ones (Gambacorta, Schiaffi, & Van Rixtel, 2017). This paper examines the impact of liquidity regulations, in particular, the liquidity coverage ratio (LCR), on funding structures of commercial banks operating in emerging markets over the period 2011 to 2016. Similar to Behn, Daminato, and Salleo (2019) who developed a dynamic partial equilibrium model to examine capital and liquidity adjustments, this paper develops three dynamic error component adjustment models and estimates them using the two-step system generalized method of moments (GMM) estimator to analyze funding adjustments adopted by banks in emerging markets in response to the LCR requirement. The results revealed that banks in emerging markets responded to binding liquidity regulations by increasing deposit, equity as well as long-term funding. In terms of the magnitude of response, deposit funding was found to be more responsive to the LCR rule while the elasticity of equity and long-term funding to the LCR specification was found to be weak. The weak response of equity and long-term funding to liquidity standards was attributed to low levels of capital market development in emerging markets (Bonner, van Lelyveld, & Zymek, 2015). By and large, the results suggest that Basel III liquidity regulations have been effective in persuading banks in emerging market economies to fund their business activities with stable funding instruments. Based on this evidence, the study supports the adoption of Basel III liquidity regulations in emerging markets. Moreover, policymakers in emerging market economies should monitor competition for retail deposits to safeguard the benefits of the LCR rule and pay more attention to developing capital markets.

A Decade After the 2009 Global Recession: Macroeconomic Developments

2021 ◽  
pp. 2150011
Author(s):  
Wee Chian Koh ◽  
Shu Yu
Keyword(s):  
Low Income ◽  
Developing Economies ◽  
Emerging Market ◽  
Bank Lending ◽  
Low Income Countries ◽  
Short Term ◽  
Fiscal Stimulus ◽  
Cross Border ◽  
Global Recession ◽  
The Impact

Emerging market and developing economies (EMDEs) weathered the 2009 global recession relatively well. However, the impact of the global recession varied across economies. EMDEs with stronger pre-crisis fundamentals — such as large foreign exchange reserves, sound fiscal positions, and low inflation — suffered milder growth slowdowns, in part due to their greater capacity to engage in monetary and fiscal stimulus. Low-income countries were also resilient, as foreign aid and inflows of remittances remained relatively stable. In contrast, EMDEs that were heavily dependent on short-term capital flows — such as portfolio investment and cross-border bank lending — fared less well, especially those in Europe and Central Asia. A key lesson for EMDEs is the need to strengthen macroeconomic frameworks and create policy space to prepare for future global downturns.

scholarly journals Macroeconomic, Institutional and Bank-Specific Determinants of Non-Performing Loans in Emerging Market Economies: A Dynamic Panel Regression Analysis

2019 ◽  
Vol 8 (3) ◽  
pp. 95-110
Author(s):  
Yilmaz Bayar
Keyword(s):  
Regression Analysis ◽  
Banking Sector ◽  
Emerging Market ◽  
Dynamic Panel Data ◽  
Emerging Market Economies ◽  
Panel Regression ◽  
Dynamic Panel ◽  
Market Economies ◽  
Nonperforming Loans ◽  
Dynamic Panel Regression

Abstract Banking sector is important for various macroeconomic and microeconomic variables in terms of mobilization of funds, increasing savings, and providing alternative investment instruments suited to the every person by minimizing the risk of adverse selection and moral hazard, allocating funds to most productive projects, risk diversification. Therefore, sound functioning of the banking sector is critical especially for emerging and developing countries. This study explores the macroeconomic, institutional, and bank-specific factors behind nonperforming banking loans as an indicator of banking sector functioning in emerging market economies over the 2000-2013 period by employing the system GMM dynamic panel data estimator. Results of the dynamic panel regression analysis showed that economic growth, inflation, economic freedom (institutional development), return on assets and equity, regulatory capital to risk-weighted assets, and noninterest income to total income affected nonperforming loans negatively, while unemployment, public debt, credit growth, lagged values of nonperforming loans, cost to income ratio and financial crises affected nonperforming loans positively.

IMF POLICY ADVICE TO EMERGING MARKET ECONOMIES DURING THE 2008–2009 CRISIS: NEW FUND OR NEW FUNDAMENTALS?

2011 ◽  
Vol 02 (01) ◽  
pp. 1-17 ◽  
Author(s):  
ATISH R. GHOSH ◽  
CHRISTOPHER CROWE ◽  
JUN IL KIM ◽  
JONATHAN D. OSTRY ◽  
MARCOS CHAMON
Keyword(s):  
International Monetary Fund ◽  
Emerging Market ◽  
Policy Advice ◽  
Emerging Market Economies ◽  
Fiscal Policies ◽  
Fiscal Consolidation ◽  
Market Economies ◽  
Advanced Economies ◽  
The Impact ◽  
The International Monetary Fund

This paper reviews the International Monetary Fund (IMF) policy advice to emerging market economies (EMEs) during the 2008-09 crisis, contrasting it to previous crisis episodes. EMEs that had strong fundamentals, and were mainly affected through international trade and financial spillovers, were advised to loosen monetary and fiscal policies, much like the counter-cyclical policies pursued by advanced economies. But in EMEs with "home-grown" vulnerabilities, the advice was more traditional fiscal consolidation, monetary restraint and structural reform, albeit with more financing and greater emphasis on cushioning the impact of the shock. Thus, the "new" IMF advice was the result of "new fundamentals" in EMEs.

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