Banks’ Holdings of Government Securities and Credit to the Private Sector in Emerging Market and Developing Economies

Author/Editor:

Romain Bouis

Publication Date:

October 11, 2019

Electronic Access:

Download PDF. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

This paper studies the relationship between banks’ holdings of domestic sovereign securities and credit growth to the private sector in emerging market and developing economies. Higher banks’ holdings of government debt are associated with a lower credit growth to the private sector and with a higher return on assets of the banking sector. Analysis suggests that the negative relationship between banks’ claims on the government and private sector credit growth mainly reflects a portfolio rebalancing of banks towards safer, more liquid public assets in stress times and provides only limited evidence of a crowding-out effect due to financial repression.

Series:

Working Paper No. 19/224

Subject:

English

Publication Date:

October 11, 2019

ISBN/ISSN:

9781513512952/1018-5941

Stock No:

WPIEA2019224

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

27

Please address any questions about this title to publications@imf.org