Commodity Price Shocks and Financial Sector Fragility
Commodity Price Shocks and Financial Sector Fragility

Author: Mr.Tidiane Kinda

Publisher: International Monetary Fund

Published: 2016-02-01

Total Pages: 48

ISBN-13: 1498328725

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This paper investigates the impact of commodity price shocks on financial sector fragility. Using a large sample of 71 commodity exporters among emerging and developing economies, it shows that negative shocks to commodity prices tend to weaken the financial sector, with larger shocks having more pronounced impacts. More specifically, negative commodity price shocks are associated with higher non-performing loans, bank costs and banking crises, while they reduce bank profits, liquidity, and provisions to nonperforming loans. These adverse effects tend to occur in countries with poor quality of governance, weak fiscal space, as well as those that do not have a sovereign wealth fund, do not implement macro-prudential policies and do not have a diversified export base. These findings are robust to a battery of robustness checks.

Commodity Price Shocks and Financial Sector Fragility
Commodity Price Shocks and Financial Sector Fragility

Author: Mr.Tidiane Kinda

Publisher: International Monetary Fund

Published: 2016-02-01

Total Pages: 48

ISBN-13: 1484398939

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This paper investigates the impact of commodity price shocks on financial sector fragility. Using a large sample of 71 commodity exporters among emerging and developing economies, it shows that negative shocks to commodity prices tend to weaken the financial sector, with larger shocks having more pronounced impacts. More specifically, negative commodity price shocks are associated with higher non-performing loans, bank costs and banking crises, while they reduce bank profits, liquidity, and provisions to nonperforming loans. These adverse effects tend to occur in countries with poor quality of governance, weak fiscal space, as well as those that do not have a sovereign wealth fund, do not implement macro-prudential policies and do not have a diversified export base. These findings are robust to a battery of robustness checks.

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.

Swing Pricing and Fragility in Open-end Mutual Funds
Swing Pricing and Fragility in Open-end Mutual Funds

Author: Dunhong Jin

Publisher: International Monetary Fund

Published: 2019-11-01

Total Pages: 46

ISBN-13: 1513519492

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How to prevent runs on open-end mutual funds? In recent years, markets have observed an innovation that changed the way open-end funds are priced. Alternative pricing rules (known as swing pricing) adjust funds’ net asset values to pass on funds’ trading costs to transacting shareholders. Using unique data on investor transactions in U.K. corporate bond funds, we show that swing pricing eliminates the first-mover advantage arising from the traditional pricing rule and significantly reduces redemptions during stress periods. The positive impact of alternative pricing rules on fund flows reverses in calm periods when costs associated with higher tracking error dominate the pricing effect.

Regional Economic Outlook, October 2015
Regional Economic Outlook, October 2015

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 2015-10-27

Total Pages: 134

ISBN-13: 1513598406

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Growth in sub-Saharan Africa has weakened after more than a decade of solid growth, although this overall outlook masks considerable variation across the region. Some countries have been negatively affected by falling prices of their main commodity exports. Oil-exporting countries, including Nigeria and Angola, have been hit hard by falling revenues and the resulting fiscal adjustments, while middle-income countries such as Ghana, South Africa, and Zambia are also facing unfavorable conditions. This October 2015 report discusses the fiscal and monetary policy adjustments necessary for these countries to adapt to the new environment. Chapter 2 looks at competitiveness in the region, analyzing the substantial trade integration that accompanied the recent period of high growth, and policy actions to nurture new sources of growth. Chapter 3 looks at the implications for the region of persistently high income and gender inequality and ways to reduce them.

Financial Development in Sub-Saharan Africa
Financial Development in Sub-Saharan Africa

Author: Mr.Montfort Mlachila

Publisher: International Monetary Fund

Published: 2016-09-14

Total Pages: 79

ISBN-13: 1475536356

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This paper discusses how sub-Saharan Africa’s financial sector developed in the past few decades, compared with other regions. Sub-Saharan African countries have made substantial progress in financial development over the past decade, but there is still considerable scope for further development, especially compared with other regions. Indeed, until a decade or so ago, the level of financial development in a large number of sub-Saharan African countries had actually regressed relative to the early 1980s. With the exception of the region’s middle-income countries, both financial market depth and institutional development are lower than in other developing regions. The region has led the world in innovative financial services based on mobile telephony, but there remains scope to increase financial inclusion further. The development of mobile telephone-based systems has helped to incorporate a large share of the population into the financial system, especially in East Africa. Pan-African banks have been a driver for homegrown financial development, but they also bring a number of challenges.

Global Shocks and the New Global and Regional Financial Architecture
Global Shocks and the New Global and Regional Financial Architecture

Author: Naoyuki Yoshino

Publisher:

Published: 2018

Total Pages: 0

ISBN-13: 9784899740698

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Asian economies continue to be subject to new shocks: US monetary policy tightening, the adoption of negative-interest-rate policies by central banks all over the world, the slowdown of the People's Republic of China, and the sharp drop in oil and other commodity prices. All these highlight the vulnerability of the region to volatile trade and capital flows even as the global and Asian regional financial architecture evolves. This volume analyzes the vulnerabilities of Asian economies to external economic and financial shocks and assesses the performance of Asian regional institutions in financial surveillance and cooperation. It also evaluates ongoing reforms of the global financial architecture, including the International Monetary Fund (IMF), the Financial Stability Board, and reviews the experience of the "Troika" (European Commission, European Central Bank, and the IMF) in managing the European sovereign debt and banking crisis. Based on these, the book develops valuable recommendations to strengthen the Asian regional financial architecture and improve cooperation with global multilateral institutions.

Financial Resource Curse in Resource-Rich Countries
Financial Resource Curse in Resource-Rich Countries

Author: Mr.Montfort Mlachila

Publisher: International Monetary Fund

Published: 2017-07-19

Total Pages: 29

ISBN-13: 1484310144

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Why do commodity-dependent developing countries have typically lower levels of financial development than their peers? The literature has proposed many possible explanations, but it typically does not dwell on the deep mechanisms that drive such an outcome. In this paper, we argue that the main cause is the shocks in commodity prices. We test the hypothesis on 68 commodity-rich developing countries between 1980 and 2014, and we find strong evidence of the financial development resource curse through the channel of commodity price shocks, after controlling for other explanations found in the literature. The findings are robust to the different types of commodities, the nature of the shocks, and various indicators of financial development. We also show how the impact of these shocks can be mitigated through good quality of governance.

Handbook Of Global Financial Markets: Transformations, Dependence, And Risk Spillovers
Handbook Of Global Financial Markets: Transformations, Dependence, And Risk Spillovers

Author: Sabri Boubaker

Publisher: World Scientific

Published: 2019-06-27

Total Pages: 828

ISBN-13: 9813236663

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The objective of this handbook is to provide the readers with insights about current dynamics and future potential transformations of global financial markets. We intend to focus on four main areas: Dynamics of Financial Markets; Financial Uncertainty and Volatility; Market Linkages and Spillover Effects; and Extreme Events and Financial Transformations and address the following critical issues, but not limited to: market integration and its implications; crisis risk assessment and contagion effects; financial uncertainty and volatility; role of emerging financial markets in the global economy; role of complex dynamics of economic and financial systems; market linkages, asset valuation and risk management; exchange rate volatility and firm-level exposure; financial effects of economic, political and social risks; link between financial development and economic growth; country risks; and sovereign debt markets.

Global Waves of Debt
Global Waves of Debt

Author: M. Ayhan Kose

Publisher: World Bank Publications

Published: 2021-03-03

Total Pages: 403

ISBN-13: 1464815453

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The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.