Explore the vast range of titles available.

In recent years, there has been significant interest in economic policy uncertainty and its economic consequences. Fluctuations in economic policies can introduce instability into business operations, resulting in elevated credit default risks. It is important to investigate whether Chinese commercial banks take economic policy uncertainty into account and adopt a more diversified loan structure to mitigate the risks associated with policy changes. In this study, we investigate the impact of economic policy uncertainty on loan concentration within a sample of Chinese commercial banks from 2007 to 2020. Using a panel dataset of 311 banks, we employ fixed-effects regression models and conduct robustness checks with instrumental variables and dynamic panel regressions to address endogeneity concerns. Our findings reveal a significant negative correlation between economic policy uncertainty and the loan concentration of banks. These results hold strong even when subjected to rigorous testing for endogeneity using instrumental variables and dynamic panel regressions. Furthermore, we also find that the negative impact of economic policy uncertainty on loan concentration is more pronounced in regional banks, small-sized banks, and banks with lower market shares. Moreover, the mechanism analysis demonstrates that operational risk serves as a vital channel through which economic policy uncertainty affects loan concentration. By shedding light on how macroeconomic policies impact the financial behavior of commercial banks, we provide new empirical evidence and valuable insights into the dynamics of bank loan structures. In light of our findings, we propose policy recommendations to ensure economic policy stability, encourage the diversification of loan portfolios, expand the regulatory scope on loan concentration, and foster improvements in the regulatory system. Plain language summary How uncertain economic policies affect changes in bank loans: Studying loan distribution across industries in China In recent years, there has been a lot of interest in how uncertain economic policies affect the economy. When economic policies change frequently, it can make it hard for businesses to plan ahead, which increases the risk of them not being able to repay their loans. We want to find out if Chinese banks consider this uncertainty when deciding how to spread out their loans to different industries, which can help them manage these risks better. In this study, we looked at how economic policy uncertainty affected the concentration of loans in Chinese banks from 2007 to 2020. We found that when economic policy uncertainty was high, banks tended to spread out their loans more instead of concentrating them in just a few industries. We used different statistical tests to make sure our findings were accurate. We also found that this effect was stronger for smaller banks, banks in certain regions, and banks with lower market shares. Additionally, we found that the way economic policy uncertainty affects loan concentration is through increasing operational risks for banks. Our study provides new evidence on how economic policies influence the decisions of banks and how they manage their loans. Based on our findings, we suggest policies to make economic policies more stable, encourage banks to diversify their loan portfolios, regulate loan concentration better, and improve the overall regulatory system.

Purpose Keeping in view the robust growth of Islamic banking around the globe, this study aims to comparatively analyze the association between liquidity creation and liquidity risk for Islamic banks (IBANs) and conventional banks (CBANs) in Pakistan and Malaysia over a period of 2004–2021. The moderating role of bank loan concentration on the aforementioned relationship is also studied. Design/methodology/approach Regression estimation methods such as fixed effect, random effect and generalized least square are deployed for obtaining results. Liquidity creation Burger Bouwman measure (cat fat and noncat fat) and Basel-III liquidity risk measure (liquidity coverage ratio) are also used. Findings The results give us insight that liquidity creation is positively and significantly related to liquidity risk in both IBANs and CBANs of Pakistan and Malaysia. This relationship has been moderated negatively (reversed) and significantly by credit concentration showing the importance of risk management and loan portfolio concentration. Practical implications It is analyzed that during the process of liquidity creation, IBANs in Pakistan faced more liquidity risk for both on and off-balance sheet transactions in the presence of moderation of loan concentration than IBANs in Malaysia necessitating strategic policy-making for important aspects of liquidity risk management and loan concentration while creating liquidity. Originality/value Such studies comparing IBANs and CBANs comparison keeping in view liquidity creation, liquidity risk and loan concentration are either limited or nonexistent.

The robust growth demonstrated by the Islamic Banking Industry over the last decade invites serious attention towards less attended areas of Islamic Banking Liquidity Creation, credit concentration, and risk-related financial stability. This study addresses the relationship between liquidity creation and solvency risk during the period of 2004–2021 in the presence of the moderating role of bank credit concentration while comparing Islamic and conventional banks in Pakistan and Malaysia. This study reveals that the relationship of bank liquidity creation is negative and significant with solvency risk across Islamic and conventional banks in Pakistan and Malaysia. This negative relationship has been positively and significantly moderated (reversed) by credit concentration. The result is robust to different regression estimation methods (fixed effect, random effect, GLS) and alternative measures of liquidity creation (Cat fat, Cat nonfat). Further, our study also observes that this relationship holds true while making a comparative analysis of Islamic and conventional banks in Pakistan and Malaysia. Islamic Banks in Pakistan faced more solvency risk while creating liquidity (both on and off-balance sheet) in the presence of moderation of credit concentration than Malaysian Islamic banks and Pakistani conventional banks, thereby showing an immediate need to establish a solvency risk management framework and a diversified loan portfolio strategy.

In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries.

This paper combines financial soundness indicators (FSIs) and stress-testing methodologies to provide a broad assessment of the soundness of Venezuela's banking sector, based on a diagnosis of its structural and transient shortcomings. While the Venezuelan banking sector appears sound under current favorable economic conditions, it remains significantly vulnerable to cyclical downturns-which have been severe in the past. Banks are particularly exposed to interest rate and credit risks. This suggests that the strong FSIs may be partly the result of a conjunctural credit boom in the context of capital controls and very low real interest rates.

Lending practices of commercial banks in Afghanistan were analyzed using CAMEL ratings. Statistically significant correlations were found: Banks with worse ratings (a) had more lending to domestic clients and (b) paid less tax. There was no statistically significant relationship between profits and total assets or between lending/assets versus profit/assets. Interviews of senior management of 8 banks accounting for about 90 percent of the commercial banking system corroborated evidence that poorly rated banks lend to domestic clients, whereas highly rated banks do not lend. Banks that lend extensively domestically engage in extra-judicial, non-traditional contract enforcement.

The Arab Spring holds the promise of improved living standards and a more prosperous future for the peoples of the Middle East and North Africa region. At the same time, the region is witnessing uncertainty and economic pressures from domestic and external sources, which will likely be exacerbated by the recent worsening of the global economy. The main challenge in the short term will be to manage expectations while maintaining economic stability. To that end, better-targeted subsidies and transfers will help free up resources for investment in infrastructure, education, and health. Policies aimed at fostering inclusive growth will also help cement the longer-term benefits of the ongoing changes in the region. In the Caucasus and Central Asia, the economic outlook is broadly positive. Exports and remittances--key growth drivers in 2010--are continuing to grow solidly, helping the recovery gain firm momentum. At the same time, uncertainties over the robustness of the global recovery constitute a downside risk to the growth outlook. Key challenges facing the region over the medium term are to create jobs and foster high and inclusive growth.