Bank Deleveraging: Causes, Channels, and Consequences for Emerging Market and Developing Countries
44 Pages Posted: 20 Apr 2016
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: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Growth Dynamics: The Myth of Economic Recovery
By Valerie Cerra and Sweta C. Saxena
-
Growth Dynamics: The Myth of Economic Recovery
By Valerie Cerra and Sweta C. Saxena
-
Growth Dynamics: The Myth of Economic Recovery
By Valerie Cerra and Sweta C. Saxena
-
The Cost of Recessions Revisited: a Reverse-Liquidationist View
-
The Cost of Recession Revisited: A Reverse-Liquidationist View
-
Phoenix Miracles in Emerging Markets: Recovering Without Credit from Systemic Financial Crises
By Guillermo A. Calvo, Alejandro Izquierdo, ...
-
Phoenix Miracles in Emerging Markets: Recovering Without Credit from Systemic Financial Crises
By Guillermo A. Calvo, Alejandro Izquierdo, ...
-
Phoenix Miracles in Emerging Markets: Recovering without Credit from Systemic Financial Crises
By Guillermo A. Calvo, Alejandro Izquierdo, ...
-
What Happens During Recessions, Crunches, and Busts?
By Stijn Claessens, M. Ayhan Kose, ...
-
What Happens during Recessions, Crunches and Busts?
By Stijn Claessens, M. Ayhan Kose, ...