The Impact of Nonperforming Loans on Cross-Border Bank Lending: Implications for Emerging Market Economies
This brief investigates the role of NPLs in cross-border bank lending by globally active banks in advanced economies. It notes that rising NPLs could trigger global banks’ withdrawal from emerging economies: during 2000–2017, globally active lenders withdrew capital from emerging market borrowers when NPLs rose. The brief emphasizes how early and even preemptive responses are crucial to addressing NPL problems. Recommendations include acting early to preempt corporate defaults, accelerating insolvency reforms, and developing distressed debt markets.
Also in this Series
- Forging Economic Resilience in the People’s Republic of China Through Value Chain Upgrading and Economic Rebalancing
- Financing Long-Term Care in Asia and the Pacific
- Surface Water Resources Assessment of the Tonle Sap and Mekong Delta River Basin Groups: Improving Climate Resilience, Productivity, and Sustainability