Explore the vast range of titles available.

This paper aims to evaluate the factors determining countries’ private credit level as well as to identify the differences of their effect during the periods when the levels of country private credit exceeded 100 percent of GDP or were below. The research methodology relies on two modifications of the multiple regression model with log differences of variables. Research results showed a negative impact of economic growth and a positive impact of consumer prices and housing prices on the level of private credit. It has also been found that in the first period when the level of private credit to GDP exceeds the 100 per cent threshold households tend to borrow more than in other periods. In the second model distinguishing between periods when the level of country’s private credit was below 100 per cent of GDP and when this level was reached or exceeded the research showed that the effects of economic growth do not differ between periods of high and low indebtedness, but the difference becomes apparent when assessing the impact of household income and expenditure, thus confirming the impact of the marginal financial depth.

This study examines how foreign banks affect private credit flows in 135 nations, including 57 emerging markets for 1995-2013. Employing different econometric techniques, I find both higher share of foreign banks and foreign assets to significantly reduce credit flows. Such decline in credit is highest in nations with more than 50 percent foreign banks. The findings support the view that foreign banks face informational asymmetries that hamper them from lending to the more informationally opaque firms. The results call for strengthening accounting standards, disclosure rules in host markets and for prospective foreign banks to modify their credit risk evaluation methods.

This study contributes by conducting a parallel assessment of foreign direct investment (FDI) and domestic credit to the private sector (private credit, DCP) within a unified dynamic panel setting, clarifying their short-run and long-run associations with growth in five ASEAN countries (ASEAN-5: Vietnam, Thailand, the Philippines, Indonesia, and Malaysia) during the period from 1986 to 2023. While many studies have examined the individual effects of FDI and DCP on economic growth, few have investigated their combined influence within the ASEAN-5 context. Using panel data from the World Bank, this study applies Autoregressive Distributed Lag (ARDL) and Error Correction Models (UECM and RECM) to capture both short-term and long-term effects. The results indicate that while FDI exhibits a positive association with economic growth, private credit exerts a negative impact, particularly when not effectively allocated toward productive sectors. Trade openness and gross fixed capital formation are also positively associated with growth, while government consumption expenditure shows a negative relationship. Overall, the findings underscore a key policy implication that governments should carefully regulate private credit expansion to align with productive economic sectors while strategically enhancing the attractiveness of FDI to sustain long-term economic growth in ASEAN-5.

We examine the response of informed market participants to the informational signal of auditor changes. Using propensity score matching and difference-in-differences research designs, we document that loan spreads increase by 22 percent on bank loans initiated within a year after auditor changes, increasing direct loan costs by approximately $6.6 million. We also find a significant increase in upfront and annual fees and the probability of pledging collateral, consistent with an increase in screening and monitoring by banks. The increase in spreads is significant for client-initiated auditor changes, with or without disagreements with the auditor, as well as for auditor resignations. Further, the significant increase in loan spreads is documented for upward, lateral, and downward auditor changes. Our results are robust to other proxies for financial reporting quality. Finally, we find no effect resulting from the forced auditor changes due to Arthur Andersen. Collectively, these results suggest that voluntary auditor changes increase information risk, which is priced in private credit markets.

The banking sector plays a pivotal role in Indonesia’s economic growth, making a substantial contribution to GDP while also influencing environmental sustainability through CO2 emissions. Despite numerous studies examining the relationship between banking development and environmental outcomes, there is a lack of research investigating the precise impact of banking activities, such as private credit distribution, on CO2 emissions. This study aims to address this gap by examining the interactions between deposit money banks (DMB), private credit (PC), gross domestic product (GDP), renewable energy usage, and CO2 emissions in Indonesia. The analysis employs an autoregressive distributed lag (ARDL) model to identify a significant negative relationship between GDP and CO2 emissions, challenging the conventional assumption that economic expansion inevitably leads to higher pollution levels. Furthermore, while DMB activities indicate a negative short-term impact on CO2 emissions, private credit has a positive short-term correlation, indicating inefficiencies in directing credit towards environmentally sustainable initiatives. These findings illustrate the challenging role of banking in influencing environmental outcomes and emphasize the necessity for policies that facilitate green financing and investments in renewable energy. Banks can play a pivotal role in supporting sustainable development by promoting sustainability in their financial practices.

This paper investigates the potential impact of the macroprudential instruments, namely debt-to-income (DTI) ratios, the loan-to-value (LTV) on controlling the private credit growth in the Arab banking system, and we also attempt to examine the effects of the monetary policy instruments on private credit growth by using Generalized Method of Moments (GMM) technique. We measure the effect of loosening or tightening these instruments on the growth of the private credit using a sample covers ten Arab countries based on quarterly data for the period (2014-2019). The results reveal that the macroprudential policy tools have the power to control the private credit growth, as the effects of tightening the DTI and the LTV ratios appear directly after one quarter, while the change of the monetary policy tools and the required reserve ratio have a negative impact on the private credit growth, and their effects appear after two quarters and one quarter respectively. Finally, the results show that there is no evidence of significant impact of the economic variables on credit growth.

Over the past three decades, rising income inequality has undermined economic performance and posed challenges for policymakers, highlighting the need to identify its underlying drivers to design effective policy responses. Financial development is often considered a potential driver of inequality, yet the theoretical and empirical literature on how financial development affects inequality remains inconclusive. Moreover, prior studies have primarily relied on traditional indicators, which do not comprehensively reflect the multidimensional nature of financial development. To address these gaps, we provide the first study to employ the IMF’s Financial Development Index and all its sub-indices within both fixed-effects and system GMM frameworks to examine whether financial development and its dimensions exhibit a nonlinear relationship with income inequality. Unlike traditional indicators, these indices offer a more comprehensive view of financial development. Using panel data for 130 countries from 1980 to 2019, we find that financial development and its dimensions—access to financial institutions (financial inclusion) and depth of financial institutions—initially reduce inequality but exacerbate it once their respective thresholds are exceeded. These results are not driven by systemic banking crises. Our study contributes by providing a more comprehensive assessment, demonstrating nonlinear effects, identifying thresholds, and offering policy implications for countries at different income levels.

A Development Emergency: the title of this year's Global Monitoring Report, the sixth in an annual series, could not be more apt. The global economic crisis, the most severe since the Great Depression, is rapidly turning into a human and development crisis. No region is immune. The poor countries are especially vulnerable, as they have the least cushion to withstand events. The crisis, coming on the heels of the food and fuel crises, poses serious threats to their hard-won gains in boosting economic growth and reducing poverty. It is pushing millions back into poverty and putting at risk the very survival of many. The prospect of reaching the Millennium Development Goals (MDGs) by 2015, already a cause for serious concern, now looks even more distant. A global crisis must be met with a global response. The crisis began in the financial markets of developed countries, so the first order of business must be to stabilize these markets and counter the recession that the financial turmoil has triggered. At the same time, strong and urgent actions are needed to counter the impact of the crisis on developing countries and help them restore strong growth while protecting the poor. Global Monitoring Report 2009, prepared jointly by the staff of the World Bank and the International Monetary Fund, provides a development perspective on the global economic crisis. It assesses the impact on developing countries, their growth, poverty reduction, and other MDGs. And it sets out priorities for policy response, both by developing countries themselves and by the international community. This report also focuses on the ways in which the private sector can be better mobilized in support of development goals, especially in the aftermath of the crisis.