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Business and Economics > Banks and Banking

You are looking at 1 - 10 of 125 items for :

  • Type: Journal Issue x
  • Financial Aspects of Economic Integration x
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Cover IMF Working Papers
Chinese Banks and Their EMDE Borrowers: Have Their Relationships Changed in Times of Geoeconomic Fragmentation?
Catherine Casanova
,
Eugenio M Cerutti
, and
Swapan-Kumar Pradhan
While Chinese banks have become the top cross-border lender to EMDEs, their expansion has slowed recently, both in terms of volume and market share. Also, the strong correlation of China’s bilateral trade and its banks’ cross-border lending has weakened, while during 2020-22 lending became more positively correlated with FDI. In our paper, we analyse these patterns and we explore the role of borrower risk variables and foreign policies. Our findings show that, although the shifting correlation from trade to FDI is a general EMDE phenomenon, China’s Belt and Road Initiative reinforces it. By contrast, borrowers that potentially benefit from geoeconomic fragmentation do not display stronger FDI-lending relationships. We also find that Chinese banks exhibit different levels of risk tolerance relative to other bank nationalities as borrower country risk variables are positively correlated with Chinese banks’ market shares, but not with their amounts of cross-border lending.
Keywords:
ross-border lending; Chinese banks; Trade; FDI; Borrower indebtedness; Pandemic; Sanctions; Geoeconomic fragmentation; cross-border lending; borrower country risk variable; FDI-lending relationship; EMDE borrower; borrower characteristic; Chinese bank; CN bank; Bank credit; Cross-border banking; Foreign direct investment; Global
Cover External Sector Report, 2023
External Sector Report, 2023
External Rebalancing in Turbulent Times
International Monetary Fund. Research Dept.

Abstract

Global current account balances—the overall size of headline current account deficits and surpluses—widened for a third consecutive year in 2022. Main drivers were Russia’s invasion of Ukraine, the uneven recovery from the pandemic, and the rapid tightening of US monetary policy. Concurrently, the US dollar appreciated substantially, and the uphill capital flow reappeared. IMF’s external sector assessments suggest that the overall size of excess current account deficits and surpluses has remained unchanged since 2021, after declining for several years. This highlights the importance of efforts in both excess surplus and deficit economies to promote external rebalancing. The US dollar appreciation under the “global dollar cycle”, which is driven primarily by global financial risks, has negative spillovers on activity and imports that fall on emerging market economies more severely than on advance economies. More flexible exchange rates and more anchored inflation expectations can mitigate negative spillovers to emerging markets.

Keywords:
Current account; Capital flows; Exchange rate; Global dollar cycle; Spillovers; External sector; dollar appreciation; dollar cycle; commodity exporter; CA deficit; CA surplus; CA gap; Real effective exchange rates; Current account balance; Emerging and frontier financial markets; Global; Africa
Cover IMF Staff Country Reports
West African Economic and Monetary Union: Financial Sector Assessment Program-Detailed Assessment Report on the Basel Core Principles for Effective Banking Supervision: West African Economic and Monetary Union: Financial Sector Assessment Program-Detailed Assessment Report on the Basel Core Principles for Effective Banking Supervision
International Monetary Fund. Monetary and Capital Markets Department
The BCEAO has conducted a comprehensive reform during the past five years. The regulatory and prudential framework were aligned with international standards and the conditions for supervision have been strengthened, although the efforts must be continued (liquidity ratio/net stable funding ratio and tools for monitoring liquidity, transfers of ownership, acquisitions of holdings, guidelines on nonperforming claims, and anti-money laundering and combating the financing of terrorism—AML-CFT). The transition to Basel III has made it possible to incorporate additional capital requirements, while the rules applicable to credit institutions were upgraded with the 2017 publication of four circulars on governance, risk management, internal supervision, and compliance.
Keywords:
IMF-World Bank Financial Sector Assessment Program; WAMU banking commission; market infrastructure; FSAP assessment's finding; banking landscape; Market risk; Credit; Bank legislation; Credit risk; Operational risk; West Africa; Global; Africa; Maghreb; Central Africa
Cover IMF Working Papers
Preemptive Policies and Risk-Off Shocks in Emerging Markets
Ms. Mitali Das
,
Ms. Gita Gopinath
, and
Sebnem Kalemli-Ozcan
We show that “preemptive” capital flow management measures (CFM) can reduce emerging markets and developing countries’ (EMDE) external finance premia during risk-off shocks, especially for vulnerable countries. Using a panel dataset of 56 EMDEs during 1996–2020 at monthly frequency, we document that countries with preemptive policies in place during the five year window before risk-off shocks experienced relatively lower external finance premia and exchange rate volatility during the shock compared to countries which did not have such preemptive policies in place. We use the episodes of Taper Tantrum and COVID-19 as risk-off shocks. Our identification relies on a difference-in-differences methodology with country fixed effects where preemptive policies are ex-ante by construction and cannot be put in place as a response to the shock ex-post. We control the effects of other policies, such as monetary policy, foreign exchange interventions (FXI), easing of inflow CFMs and tightening of outflow CFMs that are used in response to the risk-off shocks. By reducing the impact of risk-off shocks on countries’ funding costs and exchange rate volatility, preemptive policies enable countries’ continued access to international capital markets during troubled times.
Keywords:
Preemptive policies; UIP; external finance premia; risk-off shocks; FX debt; Risk-Off shock; risk-off shock; exchange rate volatility; MPM policy; Capital flow management; Macroprudential policy instruments; Interest rate parity; Capital inflows; Global; Africa
Cover Policy Papers
2019 Quota Data Update
International Monetary Fund. Finance Dept.
and
International Monetary Fund. Statistics Dept.
The paper presents summary results for the updated data set, with country-by-country details provided in Appendix I. In terms of broad country groups, the results of the data update are broadly consistent with trends observed in previous updates. The aggregate share of Emerging Market and Developing Countries (EMDCs) increased by 0.3 pp, to 50.0 percent, following a small decline in the EMDCs’ share recorded in the 2018 data update. The rising EMDC share reflected again foremost an increase for Asia. Most advanced economies recorded a small decrease in their calculated quota share using the current quota formula.
Keywords:
PP; openness variable; annexes advance; cutoff date; EMDC share; PPP GDP share; Purchasing power parity; Financial account; Labor unions; Monetary unions; Africa; Asia and Pacific; Global; Middle East; Western Hemisphere
Cover Policy Papers
Fifteenth General Review of Quotas—Quota Formula and Realigning Shares
International Monetary Fund. Finance Dept.
and
International Monetary Fund. Statistics Dept.
This paper provides background for an initial discussion under the Fifteenth General Review of Quotas (15th Review) in line with the work plan agreed by the Executive Board. It discusses issues related to further reforms of the quota formula and realigning quota shares, based on updated quota data through 2015. A companion paper, to be discussed separately, will address issues related to the size of the Fund and mix of quota and borrowed resources. Both these papers seek to facilitate initial discussions on some of the key issues for the 15th Review. No proposals are made at this stage, recognizing that further deliberations will be needed before the issues under discussion can begin to be narrowed down.
Keywords:
quota share; GDP blend; distributing quota; IMF body; IFS data; Purchasing power parity; Capital flows; Capital account; Balance of payments statistics; Financial account; Africa; Global; Middle East; Western Hemisphere; Asia and Pacific; I. quota formula variable; realigning share; International reserves
Cover IMF Working Papers
Banking Across Borders: Are Chinese Banks Different?
Mr. Eugenio M Cerutti
,
Catherine Koch
, and
Swapan-Kumar Pradhan
We explore the global footprint of Chinese banks and compare it with that of other bank nationalities. Chinese banks have become the largest cross-border creditors for almost half of all emerging market and developing economies (EMDEs). Their global reach resembles that of banks from advanced economies (AEs). We take a nationality approach as international banks, and Chinese banks in particular, grant a substantial share of their cross-border loans from affiliates located abroad. But differences remain. Using a gravity model with a novel measure of distance capturing the role of foreign affiliates across all bank nationalities, we find that larger distances deter cross-border bank lending to EMDEs more than to AEs. For Chinese banks, however, distance deters lending to EMDEs less than for peer EMDE banks. We show that for all banks combined, bilateral economic interactions like trade, FDI and portfolio investment, positively correlate with lending. Chinese banks’ lending to EMDEs also strongly correlates with trade, but not with FDI and, unlike other banks, it correlates negatively with portfolio investment.
Keywords:
Chinese banks; Trade; FDI; Gravity model; WP; borrower country; cross-border lending; EMDE borrower; bank lending; lending bank; parent country; Cross-border banking; portfolio investment; Chinese bank; U.S. dollar; Bank credit; Portfolio investment; Foreign direct investment; Foreign banks; Global
Cover IMF Working Papers
Do Remittances Enhance Financial Inclusion in LMICs and in Fragile States?
Samy Ben Naceur
,
Mr. Ralph Chami
, and
Mohamed Trabelsi
This paper explores the relationship between remittances and financial inclusion for a sample of 187 countries over the period 2004-2015, using cross-country as well as dynamic panel GMM regressions. At low levels of remittances-to-GDP, these flows act as a substitute to formal financial channels, thereby reducing financial inclusion. In contrast, when remittance-to-GDP ratio is high, above 13% on average, they tend to complement formal access and usage channels, thus enhancing financial inclusion. This “U shaped” relationship highlights the role of remittance flows in financing household consumption at low levels, while raising formal household bank savings and allowing for more intermediation, at high levels of remittance-to-GDP.
Keywords:
WP; remittance inflow; Remittances; Financial inclusion; Financial Stability; Financial Development; remittance flow; squared remittance; effect of remittance; inflows to GDP; GMM estimator; Commercial banks; Financial sector development; East Asia; South Asia; Asia and Pacific; banking sector matter; income level
Cover IMF Working Papers
Foreign Currency Bank Funding and Global Factors
Signe Krogstrup
and
Cédric Tille
The literature on the drivers of capital flows stresses the prominent role of global financial factors. Recent empirical work, however, highlights how this role varies across countries and time, and this heterogeneity is not well understood. We revisit this question by focusing on financial intermediaries’ funding flows in different currencies. A concise portfolio model shows that the sign and magnitude of the response of foreign currency funding flows to global risk factors depend on the financial intermediary’s pre-existing currency exposure. An analysis of a rich dataset of European banks’ aggregate balance sheets lends support to the model predictions, especially in countries outside the euro area.
Keywords:
WP; exchange rate; financial institution; forward market; Currency mismatch; capital flows; push factors; spillovers; cross-border transmission of shocks; European bank balance sheets; risk aversion; bank flow; wholesale funding; Cross border; exposure measure; bank funding; foreign currency borrowing; balance sheet exposure; bank foreign currency; forward contract; swap market; Currencies; Foreign currency exposure; Financial statements; Exchange rate risk; Global
Cover A Compass to Prosperity
A Compass to Prosperity
The Next Steps of Euro Area Economic Integration
International Monetary Fund

Abstract

A speech delivered by the IMF's Managing Director Christine Lagarde at the German Institute for Economic Research (DIW) as part of the Institute's Europe Lecture Series in Berlin, Germany, on March 26, 2018.

Keywords:
SPE; euro; Euro area policymaker; banking union; Euro area bank; Area member; Area counterpart; area policymaker; monetary policy; Capital markets; Monetary unions; Economic unions; Deposit insurance; Europe; Global