3 research outputs found
An International Comparison on Excessive Credit Expansion, Credit Guarantee Programs and The Risks Arising
Crediting in the banking sector plays an important role in all developed and developing
countries. For this reason, it is monitored continuously by public authorities and measures
are taken to control credit supply in economic growth periods. On the other hand, in an
economic slowdown, when banks are reluctant to increase their credit portfolio, public credit
guarantee programs are put into use to increase the credit supply.
In this study, a sample covering 26 advanced and emerging economies was analyzed, and
the effects of credit gap, credit guarantees and economic growth on credits and arising credit
risks were investigated. The findings show that both credits and non-performing loans, an
important measure of credit risk, are affected by credit gap, credit guarantees, and economic
growth. On the one hand, public credit guarantees positively affect economic growth. On the
other hand, though they are widely used for supporting small and medium-sized enterprises,
our findings suggest that such expansive credit policies might negatively affect the riskiness
of the credit portfolios and soundness of the banking sector
Credit portfolio risk and asset price cycles
Credit risk, Quantitative risk management, Integration of market and credit risk, G21, E44, C15, C63,