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Banks’ Holdings of Government Securities and Credit to the Private Sector in Emerging Market and Developing Economies
Author:
Romain Bouis
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Series:
IMF Working Papers
Volume/Issue:
Volume 2019: Issue 224
Language:
English
Publication Date:
11 Oct 2019
DOI:
https://doi.org/10.5089/9781513512952.001
ISBN:
9781513512952
ISSN:
1018-5941
Pages:
27
Keywords:
WP; return on assets; banks' claim; Sovereign debt; credit growth; bank profitability; nonperforming loans; portfolio rebalancing; financial repression; crowding-out; banks' holding; growth in EMDEs; crowding-out effect; private sector lending; growth to the private sector; credit growth to the private sector; government security holding; Credit; Government securities; Commercial banks; Bank soundness; Sub-Saharan Africa
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper studies the relationship between banks’ holdings of domestic sovereign securities and credit growth to the private sector in emerging market and developing economies. Higher banks’ holdings of government debt are associated with a lower credit growth to the private sector and with a higher return on assets of the banking sector. Analysis suggests that the negative relationship between banks’ claims on the government and private sector credit growth mainly reflects a portfolio rebalancing of banks towards safer, more liquid public assets in stress times and provides only limited evidence of a crowding-out effect due to financial repression.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund