Are Weak Banks Leading Credit Booms? Evidence From Emerging Europe
AbstractThis paper examines the behavior of bank soundness indicators during episodes of brisk loan growth, using bank-level data for central and eastern Europe and controlling for the feedback effect of credit growth on bank soundness. No evidence is found that rapid loan expansion has weakened banks during the last decade, but over time weaker banks seem to have started to expand at least as fast as, and in some markets faster than, stronger banks. These findings suggest that during credit booms supervisors need to carefully monitor the soundness of rapidly expanding banks and stand ready to take action to limit the expansion of weak banks.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 08/219.
Date of creation: 01 Sep 2008
Date of revision:
Contact details of provider:
Postal: International Monetary Fund, Washington, DC USA
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-10-28 (All new papers)
- NEP-BAN-2008-10-28 (Banking)
- NEP-EEC-2008-10-28 (European Economics)
- NEP-RMG-2008-10-28 (Risk Management)
- NEP-TRA-2008-10-28 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alejandro Micco & Ugo Panizza & Mónica Yañez, 2004.
"Bank Ownership and Performance,"
Research Department Publications, Inter-American Development Bank, Research Department
4381, Inter-American Development Bank, Research Department.
- Reint Gropp & Jukka Vesala & Giuseppe Vulpes, 2002.
"Equity and bond market signals as leading indicators of bank fragility,"
Conference Series ; [Proceedings], Federal Reserve Bank of Boston,
Federal Reserve Bank of Boston.
- Gropp, Reint & Vesala, Jukka & Vulpes, Giuseppe, 2006. "Equity and Bond Market Signals as Leading Indicators of Bank Fragility," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 38(2), pages 399-428, March.
- Gropp, Reint & Vesala, Jukka & Vulpes, Giuseppe, 2002. "Equity and bond market signals as leading indicators of bank fragility," Working Paper Series, European Central Bank 0150, European Central Bank.
- Ralph de Haas & Iman van Lelyveld, 2003.
"Foreign Banks and Credit Stability in Central and Eastern Europe: A Panel Data Analysis,"
DNB Staff Reports (discontinued), Netherlands Central Bank
109, Netherlands Central Bank.
- de Haas, Ralph & van Lelyveld, Iman, 2006. "Foreign banks and credit stability in Central and Eastern Europe. A panel data analysis," Journal of Banking & Finance, Elsevier, Elsevier, vol. 30(7), pages 1927-1952, July.
- Arellano, Manuel & Bond, Stephen, 1991.
"Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,"
Review of Economic Studies, Wiley Blackwell,
Wiley Blackwell, vol. 58(2), pages 277-97, April.
- Tom Doan, . "RATS program to replicate Arellano-Bond 1991 dynamic panel," Statistical Software Components RTZ00169, Boston College Department of Economics.
- Pierre-Olivier Gourinchas & Rodrigo Valdes & Oscar Landerretche, 2001.
"Lending Booms: Latin America and the World,"
JOURNAL OF LACEA ECONOMIA,
LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
- Gourinchas, Pierre-Olivier & Landerretche, Oscar & Valdés, Rodrigo, 2001. "Lending Booms: Latin America and the World," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2811, C.E.P.R. Discussion Papers.
- Pierre-Olivier Gourinchas & Rodrigo Valdes & Oscar Landerretche, 2001. "Lending Booms: Latin America and the World," NBER Working Papers 8249, National Bureau of Economic Research, Inc.
- Cottarelli, Carlo & Dell'Ariccia, Giovanni & Vladkova-Hollar, Ivanna, 2005. "Early birds, late risers, and sleeping beauties: Bank credit growth to the private sector in Central and Eastern Europe and in the Balkans," Journal of Banking & Finance, Elsevier, Elsevier, vol. 29(1), pages 83-104, January.
- Arellano, Manuel, 1990. "Testing for Autocorrelation in Dynamic Random Effects Models," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 57(1), pages 127-34, January.
- Martin CihÃ¡k & Wim Fonteyne, 2009. "Five Years After," IMF Working Papers 09/68, International Monetary Fund.
- Richard Pomfret, 2009.
"The Financial Sector and the Future of Capitalism,"
School of Economics Working Papers, University of Adelaide, School of Economics
2009-05, University of Adelaide, School of Economics.
- Schich, Sebastian T., 2009. "Challenges Associated with the Expansion of Deposit Insurance Coverage during Fall 2008," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 3(20), pages 1-23.
- Deniz Igan & Marcelo Pinheiro, 2011. "Credit Growth and Bank Soundness," IMF Working Papers 11/278, International Monetary Fund.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).
If references are entirely missing, you can add them using this form.