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Banks and financial intermediation in emerging Asia: reforms and new risks

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  • Madhusudan Mohanty
  • Philip Turner

Abstract

The conventional view is that microeconomic reforms after the 1997-98 Asian financial crisis have greatly strengthened banking systems in Asia. Banks have become better capitalised, external exposures have been reduced and credit risk has been managed more effectively. But this conventional view does not take enough account of the macroeconomic background. A sharp rise in domestic savings, combined with the recent large-scale sterilised intervention and easy monetary policy, has led to very easy financing conditions for banks. Bank credit expanded. Banks have accumulated a large stock of government bonds. How these conditions will change and how this will affect banks in Asia is uncertain. Supervisory authorities therefore need to be sure that the present very liquid position of most banking systems in Asia does not allow significant (but so far only latent) increases in market and credit risk to go undetected.

Suggested Citation

  • Madhusudan Mohanty & Philip Turner, 2010. "Banks and financial intermediation in emerging Asia: reforms and new risks," BIS Working Papers 313, Bank for International Settlements.
  • Handle: RePEc:bis:biswps:313
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    References listed on IDEAS

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    1. Tae Soo Kang & Guonan Ma, 2007. "Recent episodes of credit card distress in Asia," BIS Quarterly Review, Bank for International Settlements, June.
    2. Philip TURNER, 2007. "Are Banking Systems in East Asia Stronger?," Asian Economic Policy Review, Japan Center for Economic Research, vol. 2(1), pages 75-95.
    3. Wendy Dobson & Anil K. Kashyap, 2006. "The Contradiction in China's Gradualist Banking Reforms," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 37(2), pages 103-162.
    4. Luigi Zingales & Raghuram G. Rajan, 2003. "Banks and Markets: The Changing Character of European Finance," NBER Working Papers 9595, National Bureau of Economic Research, Inc.
    5. Morris Goldstein & Philip Turner, 2004. "Controlling Currency Mismatches in Emerging Markets," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 373.
    6. Eli M Remolona & Ilhyock Shim, 2008. "Credit derivatives an structured creit: the nascant markets of Asia and the Pacific," BIS Quarterly Review, Bank for International Settlements, June.
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    Cited by:

    1. Deryugina, Elena B. & Ponomarenko, Alexey A., 2011. "Identifying structural shocks behind loan supply fluctuations in Russia," BOFIT Discussion Papers 20/2011, Bank of Finland, Institute for Economies in Transition.
    2. Anna Krupkina & Alexey Ponomarenko, 2015. "Balance sheet structure indicators and the financial cycle," IFC Bulletins chapters,in: Bank for International Settlements (ed.), Indicators to support monetary and financial stability analysis: data sources and statistical methodologies, volume 39 Bank for International Settlements.
    3. Frank Packer & Haibin Zhu, 2012. "Loan loss provisioning practices of Asian banks," BIS Working Papers 375, Bank for International Settlements.
    4. Haq, Mamiza & Faff, Robert & Seth, Rama & Mohanty, Sunil, 2014. "Disciplinary tools and bank risk exposure," Pacific-Basin Finance Journal, Elsevier, vol. 26(C), pages 37-64.
    5. repec:bis:bisifc:45-18 is not listed on IDEAS
    6. Saikat Ghosh Roy, 2014. "Determinants of Non-Performing Assets in India - Panel Regression," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 2(3), pages 69-78.
    7. Thammarak Moenjak & Kengjai Watjanapukka & Oramone Chantapant & Teeravit Pobsukhirun, 2010. "New Globalization: Risks and Opportunities for Thailand in the Next Decade," Working Papers 2010-04, Monetary Policy Group, Bank of Thailand.
    8. Xu, Ying & La, Hai Anh, 2015. "Foreign banks and international shock transmission: Does bank ownership still matter?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 38(C), pages 200-216.

    More about this item

    Keywords

    Banking system; Asia; Financial markets; foreign exchange intervention;

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