Bangladesh risks growth by not confronting bad debt

2019 ◽  
Keyword(s):  
Central Bank ◽  
Banking Sector ◽  
Banking System ◽  
Fiscal Year ◽  
Gdp Growth ◽  
Potential Growth ◽  
Content Type ◽  
High Court ◽  
The Government ◽  
Bad Debt

Subject Bad debt in Bangladesh's banking sector. Significance The High Court last month stayed until June 23 a circular issued by the Bangladesh Bank, the central bank, that appeared to benefit borrowers who had defaulted on loans from the country's banking system. Meanwhile, Bangladesh registered 7.9% GDP growth in the fiscal year ending June 2018. Impacts The government will dismiss worries about a potential growth slowdown, pointing to forecast GDP growth of 8.1% in 2018/19. The Bangladesh Bank's circular would hurt banks already burdened with losses because of provisioning against bad debt. Banks may try to reduce their exposure to single borrowers.

Sanctions will reinforce Iran’s money supply woes

2018 ◽  
Keyword(s):  
Central Bank ◽  
Money Supply ◽  
Banking Sector ◽  
Banking System ◽  
Content Type ◽  
Better Regulation ◽  
The Government

Significance Inflation has to a great extent been driven by a depreciation of the rial following Washington’s decision to reimpose sanctions, yet deep structural flaws in the banking sector are also to blame. Poor regulation and widespread corruption mean that the Central Bank of Iran (CBI) has for decades created excess money. Impacts Sanctions will distract from the need to enforce better regulation of the banking system. The government will avoid painful reforms, fearing a popular backlash. The CBI will respond to sanctions-related pressures by creating more money.

Indian corporations are unlikely to set up banks

2020 ◽  
Keyword(s):  
Public Sector ◽  
Central Bank ◽  
Banking System ◽  
Capital Adequacy ◽  
Content Type ◽  
Public Sector Banks ◽  
The Government ◽  
Set Up ◽  
Bad Debt

Significance The government and central bank are looking for ways to strengthen the country’s banking system, which is beset by low capital adequacy ratios (CARs) and rising non-performing assets (NPAs). India’s leading conglomerates are asset rich, and their profitability is growing. Impacts The RBI will come under pressure to increase regulation of private as well as public sector banks. Many state-owned banks will merge in a bid to reduce their bad debt. Small NBFCs will face a challenge to sustain liquidity.

scholarly journals Influence of economic freedom and its subcomponents on risk-taking behavior

2019 ◽  
Vol 12 (4) ◽  
pp. 335-356 ◽  
Author(s):  
Rafik Harkati ◽  
Syed Musa Alhabshi ◽  
Salina Kassim
Keyword(s):  
Risk Taking ◽  
Economic Freedom ◽  
Banking Sector ◽  
Banking System ◽  
Islamic Banks ◽  
Content Type ◽  
Economic Freedom Index ◽  
Risk Taking Behavior ◽  
The Government ◽  
Conventional Banks

Purpose The purpose of this paper is to investigate the influence of economic freedom and six relevant subcomponents of it on the risk-taking behavior of banks in the Malaysian dual banking system. It also aims to make a comparative analysis between Islamic and conventional banks operating in this dual banking sector. Moreover, the study is an effort to enrich the existing literature by presenting empirical evidence on the argument that the risk-taking behavior of the two types of banks is indistinguishable given that they operate in the same regulatory environment. Design/methodology/approach Secondary data of all banks operating in the Malaysian banking sector are collected from FitchConnect database, in addition to the economic freedom index from Foundation Heritage for the period 2011–2017. Generalized least squares technique is employed to estimate the influence of economic freedom and the six relevant subcomponents of it on the risk-taking behavior of banks. Findings The level of economic freedom influenced risk-taking behavior within the banking sector as a whole, conventional and Islamic banking sectors negatively during the study period (2011–2017). Risk-taking behavior of conventional and Islamic banks is similar. However, conventional banks turn to be less influenced by economic freedom level as compared to Islamic banks. Practical implications The government and regulators may benefit from the results by rethinking and setting the best economic freedom index that better serves the stability of the banking system, and lessens banks’ risk-taking inclination. Originality/value To the present time, this paper is thought to be of a significant contribution. Given the argument that Islamic and conventional banks behave in the same way. This is one of the first attempts to address this issue in light of the influence of economic freedom and six subcomponents of it on the risk-taking behavior of banks operating in a dual banking system.

Ghana's IMF bailout to persist despite souring ties

2016 ◽  
Keyword(s):  
Central Bank ◽  
Budget Deficit ◽  
Credit Rating ◽  
Gdp Growth ◽  
Content Type ◽  
Bank Financing ◽  
Electricity Crisis ◽  
Manufacturing Activity ◽  
The Government ◽  
The Imf

Significance Earlier this month, the government passed a bill allowing for central bank financing of the budget deficit, contravening a core requirement in its agreement with the Fund. Earlier breaches led to the fourth tranche of the bailout (worth 114 million dollars) being withheld. Impacts Other donors will withhold aid disbursements until the impasse between Accra and the IMF is resolved. The electricity crisis will continue to undermine manufacturing activity, contributing to disappointing GDP growth. Ivory Coast's pro-business reforms mean it could attract investors deterred by Ghana's economic woes. Prolonged tensions with the IMF coupled with a deterioration its Ghana's fiscal metrics may drive a credit rating downgrade.

Iran’s banking reforms will falter

2017 ◽  
Keyword(s):  
Central Bank ◽  
Dispute Resolution ◽  
Banking Sector ◽  
Banking System ◽  
Banking Reform ◽  
Content Type ◽  
Global Standards ◽  
Central Asian ◽  
European Banks ◽  
Dispute Resolution Mechanism

Subject Iran’s banking sector in urgent need of reform. Significance Tehran's banks face major corruption scandals, and a complex policy environment. In July 2016, the Central Bank of Iran (CBI) announced major plans to reform the country’s banking system in line with global standards. Iranian banks have been cut off from the international financial system since 2012, owing to sanctions. After the 2015 nuclear deal, Iran expected that the lifting of sanctions would reverse this situation. However, despite interest among Central Asian and Turkish banks, progress has been limited. Impacts European banks will be slow to engage with Iran, fearing unpredictable US penalties. Differing US and Iranian interpretations of sanctions lifting under the nuclear deal may come up before the dispute resolution mechanism. Macroeconomic strains will put depreciatory pressure on the currency. If President Hassan Rouhani fails to win re-election in May, the chances of banking reform would be much lower.

India’s central bank will be more amenable to Modi

2019 ◽  
Keyword(s):  
Prime Minister ◽  
Fiscal Year ◽  
Gdp Growth ◽  
Content Type ◽  
Reserve Bank ◽  
Bharatiya Janata Party ◽  
Consecutive Term ◽  
Indian Banks ◽  
Bad Debt ◽  
Reserve Bank Of India

Subject RBI under new governorship. Significance Shaktikanta Das was last month appointed Reserve Bank of India (RBI) governor after Urjit Patel resigned. Prime Minister Narendra Modi’s government had for several months clashed with the RBI over how to foster economic growth. The general election is likely in April or May, when Modi’s Bharatiya Janata Party (BJP) faces a tough fight to win a second consecutive term. Impacts In election campaigning, Modi will emphasise India’s mostly robust quarterly GDP growth figures during his term. Indian banks’ level of bad debt could decrease by the end of the fiscal year ending March 2019. India will likely widen its fiscal deficit target for 2018/19 (3.3% of GDP) ahead of the 2019/20 budget.

India’s remedy for bad debt may not bring relief

2017 ◽  
Keyword(s):  
Prime Minister ◽  
Banking System ◽  
Job Creation ◽  
Bank Credit ◽  
Content Type ◽  
Reserve Bank ◽  
Bankruptcy Code ◽  
The Government ◽  
Bad Debt ◽  
Reserve Bank Of India

Subject Implementation of India's new Insolvency and Bankruptcy Code. Significance Shrinking bank credit is hindering India’s ability to finance spending. The Reserve Bank of India (RBI) is relying on the recently instituted Insolvency and Bankruptcy Code (IBC) as the principal instrument to address the problem of stressed assets in the banking system. Impacts The government may accelerate plans to merge stronger and weaker PSBs. Indian corporates may increase their issue of bonds denominated in domestic currency. Prime Minister Narendra Modi will emphasise job creation rather than investment until the next election.

Tajik remittance slump will weaken flawed banks

2016 ◽  
Keyword(s):  
Financial Institutions ◽  
Banking Sector ◽  
Banking System ◽  
International Financial Institutions ◽  
Content Type ◽  
Bank Deposits ◽  
The Rich ◽  
The Government ◽  
Main Banks ◽  
Poor Management

Subject Tajikistan's troubled banking sector. Significance Tajikistan's banking system has been in crisis since 2015, as problems in Russia feed through to this remittance-dependent economy. A decline in funds sent home by labour migrants has shrunk bank deposits, and the proportion of non-performing loans has risen sharply. The cash crisis is exacerbated by poor management and cronyism in financial institutions. The main banks, Tojiksodirotbank and Agroinvestbank, have restricted customer withdrawals. Impacts International financial institutions will condition assistance on reforms. However, the government will balk at any reform measures liable to hurt the rich and powerful. The government may seek Chinese support for the banking sector.

Plan to clear Greek banks’ bad debt looks feasible

2017 ◽  
Keyword(s):  
Commercial Banks ◽  
Bank Lending ◽  
Gdp Growth ◽  
Working Capital ◽  
Content Type ◽  
Loan Portfolios ◽  
Key Sectors ◽  
The Government ◽  
Greek Banks ◽  
Bad Debt

Subject Efforts to cleanse banks’ loan portfolios. Significance More than half of Greek bank lending is classed as ‘non-performing exposures’ (NPEs), constraining lending capacity and so putting negative pressure on GDP growth. The government says it should have a whole package of measures in place by mid-August to deal with NPEs. There have been slippages before, but this time the creditors are leaning very heavily on Athens to stick to the timetable. Impacts Bad debts will limit commercial banks’ capacity to make new loans to key sectors of the economy. This will have an adverse effect on working capital for existing businesses and their trade. Lack of liquidity will also slow new investments and construction.

Bangladesh economy is showing signs of resilience

2021 ◽  
Keyword(s):  
Economic Recovery ◽  
Fiscal Year ◽  
Gdp Growth ◽  
Content Type ◽  
Garment Workers ◽  
The Government

Significance The pandemic has badly hit the economically important ready-made garments (RMG) sector, but there are signs that textile exports are picking up. The government targets GDP growth of 8.2% in the fiscal year ending June 2021 -- the same as in 2018/19, and a marked recovery from the slowdown in 2019/20. Impacts Economic recovery will boost support for the government, whose dominance of politics remains formidable. Garment workers who remain out of work may engage in anti-government protests. Supplies of COVID-19 vaccines from India will help consolidate Dhaka-Delhi ties.

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