IV Response to Deregulation
Author:
Mr. Burkhard Drees
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Ceyla Pazarbasioglu https://isni.org/isni/0000000404811396 International Monetary Fund

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Language:
English
Print Publication Date:
20 Apr 1998
Keywords:
OP; bank; lending; deregulation; savings bank; rate; funding cost; lending growth; bank management; bank Profitability; intermediation margin; Bank credit; Credit; Commercial banks; Loans; Loan loss provisions

Abstract

Banks, just like other enterprises, develop their business practices and behavior on the basis of the prevailing regulatory environment, as the preceding section illustrated. Financial deregulation, which was accomplished within a few years in the Nordic countries, was a major shock to the system and posed new challenges for borrowers and lenders alike to adapt to the new environment. Indeed, the financial systems in the Nordic countries responded quickly. As in other countries that underwent financial liberalization, the most striking development was the significant rise in bank lending and risk taking (see Sundararajan and Baliño, 1991, and Bisat, Johnston, and Sundararajan, 1992). This section analyzes the incentives that led borrowers and lenders to expand credit and banks to alter their loan portfolios and funding.

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Cover The Nordic Banking Crisis
The Nordic Banking Crisis
Pitfalls in Financial Liberalization: Pitfalls in Financial Liberalization
ISBN:
9781557757005
ISSN:
0251-6365
Publication Date:
20 Apr 1998
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781557757005.084
Pages:
41

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