The Dynamics of Non-Performing Loans during Banking Crises: A New Database
The Dynamics of Non-Performing Loans during Banking Crises: A New Database

Author: Mr.Anil Ari

Publisher: International Monetary Fund

Published: 2019-12-06

Total Pages: 40

ISBN-13: 1513523155

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This paper presents a new dataset on the dynamics of non-performing loans (NPLs) during 88 banking crises since 1990. The data show similarities across crises during NPL build-ups but less so during NPL resolutions. We find a close relationship between NPL problems—elevated and unresolved NPLs—and the severity of post-crisis recessions. A machine learning approach identifies a set of pre-crisis predictors of NPL problems related to weak macroeconomic, institutional, corporate, and banking sector conditions. Our findings suggest that reducing pre-crisis vulnerabilities and promptly addressing NPL problems during a crisis are important for post-crisis output recovery.

Nonperforming Loans in Asia and Europe—Causes, Impacts, and Resolution Strategies
Nonperforming Loans in Asia and Europe—Causes, Impacts, and Resolution Strategies

Author: Asian Development Bank

Publisher: Asian Development Bank

Published: 2021-12-01

Total Pages: 262

ISBN-13: 9292691163

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High and persistent levels of nonperforming loans (NPLs) have featured prominently in recent financial crises. This book traces NPL trends during and after crises, examines the economic impact of high NPLs, and compares the effectiveness of NPL resolution strategies across economies in Asia and Europe. The book distills important lessons from the experiences of economies using case studies and empirical investigation of ways to resolve NPLs. These findings can be invaluable in charting a course through the financial and economic fallout of the coronavirus disease (COVID-19) pandemic to recovery and sustained financial stability in Asia, Europe, and beyond.

Resolving Nonperforming Loans in Sub-Saharan Africa in the Aftermath of the COVID-19 Crisis
Resolving Nonperforming Loans in Sub-Saharan Africa in the Aftermath of the COVID-19 Crisis

Author: Luc Eyraud

Publisher: International Monetary Fund

Published: 2021-06-08

Total Pages: 85

ISBN-13: 1513576518

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Sub-Saharan African countries are facing an unprecedented health and economic crisis that is likely to severely hurt credit quality and raise non-performing loans from already high levels. Banks have a critical role to play not only during the crisis by providing temporarily relief to businesses and households, but also during the recovery by supporting economic activity and facilitating the structural transformations engaged by the pandemic.

The Dynamics of Non-Performing Loans during Banking Crises: A New Database
The Dynamics of Non-Performing Loans during Banking Crises: A New Database

Author: Mr.Anil Ari

Publisher: International Monetary Fund

Published: 2019-12-06

Total Pages: 40

ISBN-13: 1513521152

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This paper presents a new dataset on the dynamics of non-performing loans (NPLs) during 88 banking crises since 1990. The data show similarities across crises during NPL build-ups but less so during NPL resolutions. We find a close relationship between NPL problems—elevated and unresolved NPLs—and the severity of post-crisis recessions. A machine learning approach identifies a set of pre-crisis predictors of NPL problems related to weak macroeconomic, institutional, corporate, and banking sector conditions. Our findings suggest that reducing pre-crisis vulnerabilities and promptly addressing NPL problems during a crisis are important for post-crisis output recovery.

How to Assess the Benefits of Nonperforming Loan Disposal in Sub-Saharan Africa Using a Simple Analytical Framework
How to Assess the Benefits of Nonperforming Loan Disposal in Sub-Saharan Africa Using a Simple Analytical Framework

Author: Irina Bunda

Publisher: International Monetary Fund

Published: 2021-06-08

Total Pages: 23

ISBN-13: 1513583093

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The coronavirus (COVID-19) crisis, which has hit financial systems across Africa, is likely to deteriorate banks’ balance sheets. The largest threat to banks pertains to their loan portfolios, since many borrowers have faced a sharp collapse in their income, and therefore have difficulty repaying their obligations as they come due. This could lead to a sharp increase in nonperforming loans (NPLs) in the short to medium term.

Nonperforming Loans in the GCC Banking System and their Macroeconomic Effects
Nonperforming Loans in the GCC Banking System and their Macroeconomic Effects

Author: Mr.Raphael A. Espinoza

Publisher: International Monetary Fund

Published: 2010-10-01

Total Pages: 26

ISBN-13: 1455208892

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According to a dynamic panel estimated over 1995 - 2008 on around 80 banks in the GCC region, the NPL ratio worsens as economic growth becomes lower and interest rates and risk aversion increase. Our model implies that the cumulative effect of macroeconomic shocks over a three year horizon is indeed large. Firm-specific factors related to risk-taking and efficiency are also related to future NPLs. The paper finally investigates the feedback effect of increasing NPLs on growth using a VAR model. According to the panel VAR, there could be a strong, albeit short-lived feedback effect from losses in banks’ balance sheets on economic activity, with a semi-elasticity of around 0.4.

Managing the Sovereign-Bank Nexus
Managing the Sovereign-Bank Nexus

Author: Mr.Giovanni Dell'Ariccia

Publisher: International Monetary Fund

Published: 2018-09-07

Total Pages: 54

ISBN-13: 1484359623

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This paper reviews empirical and theoretical work on the links between banks and their governments (the bank-sovereign nexus). How significant is this nexus? What do we know about it? To what extent is it a source of concern? What is the role of policy intervention? The paper concludes with a review of recent policy proposals.

Financial Crises Explanations, Types, and Implications
Financial Crises Explanations, Types, and Implications

Author: Mr.Stijn Claessens

Publisher: International Monetary Fund

Published: 2013-01-30

Total Pages: 66

ISBN-13: 1475561008

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This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises—currency crises, sudden stops, debt crises, and banking crises—and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.

A Strategy for Resolving Europe's Problem Loans
A Strategy for Resolving Europe's Problem Loans

Author: Mr.Shekhar Aiyar

Publisher: International Monetary Fund

Published: 2015-09-24

Total Pages: 79

ISBN-13: 1513511653

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Europe’s banking system is weighed down by high levels of non-performing loans (NPLs), which are holding down credit growth and economic activity. This discussion note uses a new survey of European country authorities and banks to examine the structural obstacles that discourage banks from addressing their problem loans. A three pillared strategy is advocated to remedy the situation, comprising: (i) tightened supervisory policies, (ii) insolvency reforms, and (iii) the development of distressed debt markets.

An Anatomy of Credit Booms
An Anatomy of Credit Booms

Author: Mr.Marco Terrones

Publisher: International Monetary Fund

Published: 2008-09-01

Total Pages: 52

ISBN-13: 1451870841

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We study the characteristics of credit booms in emerging and industrial economies. Macro data show a systematic relationship between credit booms and economic expansions, rising asset prices, real appreciations and widening external deficits. Micro data show a strong association between credit booms and leverage ratios, firm values, and banking fragility. We also find that credit booms are larger in emerging economies, particularly in the nontradables sector; most emerging markets crises are associated with credit booms; and credit booms in emerging economies are often preceded by large capital inflows but not by financial reforms or productivity gains.