Bank Deleveraging: Causes, Channels, and Consequences for Emerging Market and Developing Countries

44 Pages Posted: 20 Apr 2016

See all articles by Erik Feyen

Erik Feyen

World Bank - Finance & Markets Global Practice; Ahead Analytics Inc

Katie Kibuuka

World Bank

Inci Otker-Robe

affiliation not provided to SSRN

Date Written: June 1, 2012

Abstract

Just before the 2008-09 global financial crisis, policymakers were concerned about the rapid growth of bank credit, particularly in Europe; now worry centers on a potential global credit crunch led by European banking institutions. Overall, credit conditions across Europe deteriorated markedly in late 2011. Spillover effects are being felt around the globe and imply significant channels through which deleveraging could have disruptive consequences for credit conditions in emerging markets, particularly in emerging Europe. Significant liquidity support provided by the European Central Bank was a "game changer," at least in the short term, as it helped revive markets and limited the risk of disorderly deleveraging. However, the extent, speed, and impact of European bank deleveraging remain highly dependent on the evolution of economic growth and market conditions, which in turn are guided by the ultimate impact of European Central Bank liquidity support, resolution of the sovereign debt crisis within the Euro Area, and the ability of the European rescue fund to provide an effective firewall against contagion.

Keywords: Banks & Banking Reform, Access to Finance, Debt Markets, Financial Intermediation, Bankruptcy and Resolution of Financial Distress

Suggested Citation

Feyen, Erik H. B. and Kibuuka, Katie and Otker-Robe, Inci, Bank Deleveraging: Causes, Channels, and Consequences for Emerging Market and Developing Countries (June 1, 2012). World Bank Policy Research Working Paper No. 6086, Available at SSRN: https://ssrn.com/abstract=2083430

Erik H. B. Feyen (Contact Author)

World Bank - Finance & Markets Global Practice ( email )

1818 H Street, N.W.
Washington, DC 20433
United States
+1 (202) 458 2038 (Phone)
+1 (202) 522 3184 (Fax)

Ahead Analytics Inc ( email )

Washington, DC
United States

HOME PAGE: http://www.aheadanalytics.com

Katie Kibuuka

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Inci Otker-Robe

affiliation not provided to SSRN

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
149
Abstract Views
849
Rank
354,722
PlumX Metrics