Prudential Issues in Less Diversified Economies

By Aditya Narain, Pau Rabanal, Steen Byskov

October 1, 2003

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Aditya Narain, Pau Rabanal, and Steen Byskov. Prudential Issues in Less Diversified Economies, (USA: International Monetary Fund, 2003) accessed September 18, 2024

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

This paper examines the prudential issues associated with credit concentration in less diversified economies (LDEs), which are identified as countries where one or two sectors represent a large share of exports. In preparing this analysis, the characteristics of their financial and banking systems and their interactions with the real sector are studied. The paper also examines the limitations on portfolio diversification confronting banks in these countries, both from the viewpoint of the real sector and of the financial system. The paper finds that banks in LDEs, particularly in low-income countries, appear to face higher risk than their peers in more diversified economies and makes suggestions for policy options and regulatory practices which could be encouraged in such systems.

Subject: Banking, Commercial banks, Credit, Credit risk, Financial institutions, Financial regulation and supervision, Loans, Money, Nonperforming loans

Keywords: Bank capital, Bank concentration, Bank customer, Bank supervisor, Banking industry, Banks assets, Capital Adequacy, Commercial banks, Credit, Credit Concentration Risks, Credit risk, Less Diversified Economies, Loans, Nonperforming loans, Originating bank, Private sector, West Africa, WP

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/198
Stock No:

WPIEA1982003
ISBN:

9781451860085
ISSN:

1018-5941

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