Credit conditions
HKMA tightens restrictions on bank loans as risks rise
The city’s de facto central bank is trying to contain credit risk among banks as their exposure to housing developers is growing
LTV ratio more effective than DTS in Canada – BIS paper
Paper examines the effect of recent macro-prudential policies targeting the housing market, finding households will borrow more if they can
BIS paper says macro-pru is better when partnered with monetary policy
Macro-pru does not work as well when it acts as a substitute for monetary policy when dampening credit cycles; when deployed as the main instrument, policies prove very successful even in the short term
IMF urges new macro-pru tools for RBNZ to tackle housing market
Debt-to-income tools would complement existing macro-prudential toolkit and help rein in household credit, fund says; RBNZ in pursuit of such powers but decision must come from government
Credit booms make for more severe recessions – BoE paper
Authors find credit growth is a more reliable predictor of the severity of recessions than debt
IMF warns bad political choices could trigger instability
Fund says financial stability has improved, but high risks remain in China, Europe and the US
Thinking on global capital flows is muddled – BIS’s Shin
BIS head of research says policies to guard against excess global liquidity should look at underlying causes, not symptoms such as capital flows; Fed’s Fischer acknowledges policy spillovers
Riksbank cautious on plans for new macro-prudential tools
Central bank broadly welcomes government proposals but takes issue with elements it sees as limiting flexibility
Sarb deputy says political uncertainty will affect policy normalisation
Mminele asks whether central banks will enforce notion of economic slack as forward guidance reaches limits; political uncertainty rocking the policy landscape
Tucker: policymakers should focus on resilience and clarity
Central banks would gain legitimacy if they could better explain their models of systemic crises, and if politicians specified a particular risk tolerance, says former BoE deputy governor Paul Tucker
Bank and capital market financing not created equal – BIS paper
Substituting bank loans for non-bank finance after a shock appears to have a negative impact on the economy, authors find
Third of businesses think investment has been ‘too low’ – BoE survey
Bank of England publishes results of survey of UK firms in latest quarterly bulletin; businesses experienced both real economy and financial “obstacles” to investment
New factors driving EM corporate leverage – RBI paper
Changed macroeconomic backdrop has taken over from firm-specific factors in driving the build-up of corporate leverage in emerging markets, RBI economist finds
PBoC working to rein in shadow banking risks
Central bank is toughening its regulatory stance and tightening interbank liquidity as shadow banking products proliferate
Seychelles governor underscores the challenges facing SMEs
Abel says they lack funding as well as non-financial support; central bank will work with commercial sector to come up with a strategy for SME lending
NPLs remain an issue, says Serbian governor Tabaković
Corporate sector accounts for 45% of total NPLs, notes governor
Scrap micro-foundations to repair macroeconomics – Steve Keen
Professor says economy should be viewed as a dynamic system with credit playing a crucial role, arguing we should ditch models such as DSGE
Tanzanian central bank slashes discount rate
Central bank cuts discount rate for the first time since 2013, from 16% to 12%; increase in NPLs has discouraged commercial banks from lending
BoE paper isolates loan supply impact of credit crunch
“Rich, tailor-made data set” informs study of how pre-crisis bank lending characteristics may have impacted post-crisis credit supply
Bank of Namibia takes over government-owned commercial bank
Bank of Namibia removes SME Bank’s chief executive after “suspicious investments” in South Africa; all banking services will continue to operate
IMF praises BCEAO’s latest policy actions
Latest round of measures will result in stronger banking sector, mission chief says; rejuvenation of interbank market will help monetary policy effectiveness
IMF paper examines bank lending in Saudi Arabia
Despite low oil prices, credit to the private sector “remained robust”, but an overreliance on banks financing the deficit needs to stop, author says
BoE paper calls for international standards on 'broader co-ordination'
Credit growth in the rest of the world has a large positive effect on the probability of domestic banking crises
BoE’s Cunliffe sheds light on investment issues
One in five firms report constraints on credit access reduced investment, BoE deputy says, while restrictions on internal fund usage have worsened the problem