Credit Growth and Bank Soundness: Fast and Furious?

Igan, Deniz; Pinheiro, Marcelo

doi:10.5089/9781463925956.001

Cited by 24 publications

(22 citation statements)

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“…Bank soundness is measured by estimating the distance to default (DD) of a bank (Igan, Pinheiro 2011). Distance to default is calculated as follows:…”

Section: Choice and Description Of Variablesmentioning

confidence: 99%

Banking Industry Concentration and Net Interest Margins (Nims) in Pakistan

Hussain

2013

Journal of Business Economics and Management

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This paper uses bank level data of 26 commercial banks for the period 2001-2010 to explore determinants of net interest margins of commercial banks of Pakistan. Based on results of this study, past net interest margins, bank soundness, operating cost, industry concentration, relative market share, inflation, real depreciation and industrial growth have statistically significant and positive impact while diversification, change in bank size, lagged liquidity, stock market development have dampening effects on net interest margins. However, impact of ownership, GDP and credit market development is statistically insignificant. Our regression results suggest that stock market development as means of alternative source of finance contributes to reduction in net interest margins while the impact of banking sector development on breaking banking cartels and bringing net interest margins down had been insignificant. Exchange rate adjustments, rate of inflation and growth of the industry also cannot be ignored in management of net interest margins. Incentives for bank executives and managers to ensure efficiency in operating costs, reduction in the premium charged for bank soundness, diversification of bank activities and passing on the scale efficiencies to both depositors and borrowers can also play role to bring interest margins down to accelerate investment and growth in the country.

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“…Bank soundness is measured by estimating the distance to default (DD) of a bank (Igan, Pinheiro 2011). Distance to default is calculated as follows:…”

Section: Choice and Description Of Variablesmentioning

confidence: 99%

Banking Industry Concentration and Net Interest Margins (Nims) in Pakistan

Hussain

2013

Journal of Business Economics and Management

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“…On the other hand, the internal condition of banks is also a reference in giving banks credit that gives effect to credit growth. The internal health of banks can make the impact of lending, in other words, credit growth will also be affected (Igan and Pinheiro, 2011). The results of this study indicate that the healthiness of banks can give effect to credit growth but not in generating procyclical credit.…”

Section: Resultsmentioning

confidence: 72%

Evaluation Of Macroprudential Policy On Credit Growth In Indonesia: Credit Registry Data Approach

Dana

2018

Etikonomi

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Macro-prudential policies have an essential role in mitigating the imbalances in the financial sector that stem from procyclical credit growth. This study aims to evaluate macro-prudential policy in mitigating risk on procyclical credit growth with a registry data approach. Structural Vector Autoregression (SVAR) analysis method is used to evaluate macro-prudential policy in influencing credit growth. The results show LTV instruments can reduce credit growth but not to procyclical mitigation. Dissimilar results in the implementation of CCB and GWM + LDR instruments are capable of procyclical credit mitigation. Policies that can be done by the central bank are the establishment of an early warning system in macro-prudential policy as well as strengthening of Countercyclical Buffer (CCB), Loan to Value (LTV) instruments and Minimum Reserve Requirement + Loan Funding Ratio (GWM + LFR) in capturing systemic risks from various sources which further strengthens the assessment and surveillance.DOI:10.15408/etk.v17i2.7324

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“…Finally, Stepanyan reviewed a recommendation that credit expansion period should be linked with commercial banks having the safety balance sheet and low level of non-performing loans. In a similar research topic, Igan and Pinheiro (2011) reviewed the correlation among credit growth and the soundness of bank by observing two-way causality. Two periods were divided included moderate growth time and boom period.…”

Section: In the Assessment Of Rapid Credit Growthmentioning

confidence: 99%