Development of the Commercial Banking System in Afghanistan: Risks and Rewards

 
Author/Editor: Pavlovic, Jelena ; Charap, Joshua
 
Publication Date: July 01, 2009
 
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: 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.
 
Series: Working Paper No. 09/150
Subject(s): Afghanistan, Islamic Republic of | Banking | Banking sector | Commercial banks | Emerging markets | Financial sector | Loans | Profits

Author's Keyword(s): Afghanistan | bank lending practices | CAMEL ratings | extra-judicial contract enforcement | emerging market banks.
 
English
Publication Date: July 01, 2009
Format: Paper
Stock No: WPIEA2009150 Pages: 28
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
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