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Recent Credit Stagnation in the Mena Region; What to Expect? What Can Be Done?

Author

Listed:
  • Ralph Chami
  • Raphael A Espinoza
  • Adolfo Barajas
  • Heiko Hesse

Abstract

This paper examines the recent credit slowdown among Middle Eastern and North African (MENA) countries from three analytical angles. First, it finds that, similar to other regions and to its past history, a credit boom preceded the current slowdown, and that a protracted period of sluggish growth is likely going forward. Second, it uncovers a key role played by bank funding (deposit growth and external borrowing slowed considerably) but whose effect was frequently dampened by expansionary monetary policy. Third, bank-level fundamentals - capitalization and loan quality - helped to explain differences in credit growth across banks and countries.

Suggested Citation

  • Ralph Chami & Raphael A Espinoza & Adolfo Barajas & Heiko Hesse, 2010. "Recent Credit Stagnation in the Mena Region; What to Expect? What Can Be Done?," IMF Working Papers 10/219, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:10/219
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    References listed on IDEAS

    as
    1. Prakash Kannan, 2010. "Credit Conditions and Recoveries from Recessions Associated with Financial Crises," IMF Working Papers 10/83, International Monetary Fund.
    2. Adolfo Barajas & Roberto Steiner, 2002. "Credit Stagnation in Latin America," IMF Working Papers 02/53, International Monetary Fund.
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    Cited by:

    1. Herrera, Santiago & Hurlin, Christophe & Zaki, Chahir, 2013. "Why don't banks lend to Egypt's private sector?," Economic Modelling, Elsevier, vol. 33(C), pages 347-356.
    2. Simon T Gray & Philippe D Karam & Rima Turk-Ariss, 2014. "Are Banks Really Lazy? Evidence from Middle East and North Africa," IMF Working Papers 14/86, International Monetary Fund.
    3. Carlos Montoro & Liliana Rojas-Suarez, 2015. "Credit in Times of Stress: Lessons from Latin America during the Global Financial Crisis," Review of Development Economics, Wiley Blackwell, vol. 19(2), pages 309-327, May.
    4. Selim Elekdag & Yiqun Wu, 2013. "Rapid Credit Growth in Emerging Markets: Boon or Boom-Bust?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(5), pages 45-62, September.
    5. Carlos Montoro & Liliana Rojas-Suarez, 2012. "Credit at times of stress: Latin American lessons from the global financial crisis," BIS Working Papers 370, Bank for International Settlements.
    6. Vahram Stepanyan & Kai Guo, 2011. "Determinants of Bank Credit in Emerging Market Economies," IMF Working Papers 11/51, International Monetary Fund.
    7. Corinne C Delechat & Camila Henao Arbelaez & Priscilla S Muthoora & Svetlana Vtyurina, 2012. "The Determinants of Banks' Liquidity Buffers in Central America," IMF Working Papers 12/301, International Monetary Fund.
    8. Saadaoui Zied, 2015. "The Cyclical Behaviour of Bank Capital Buffers: An Empirical Evidence for MENA Banking Systems," Review of Middle East Economics and Finance, De Gruyter, vol. 11(2), pages 145-182, August.
    9. Liliana Rojas-Suarez and Carlos Montoro, 2012. "Credit at Times of Stress: Latin American Lessons from the Global Financial Crisis - Working Paper 289," Working Papers 289, Center for Global Development.
    10. Selim Elekdag & Yiqun Wu, 2011. "Rapid Credit Growth; Boon or Boom-Bust?," IMF Working Papers 11/241, International Monetary Fund.

    More about this item

    Keywords

    Banking sector; Bank credit; Economic growth; Cross country analysis; Credit expansion; North Africa; Monetary policy; Middle East; Credit boom; deposit; banks balance sheet; credit booms; banking; pre-crisis; bank lending;

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