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What Is the Impact of the Global Financial Crisis on the Banking System in East Asia?

dc.contributor.authorMichael Pomerleano
dc.date.accessioned2015-04-10T10:16:41Z
dc.date.available2015-04-10T10:16:41Z
dc.date.issued2009-08-15
dc.identifier.urihttp://hdl.handle.net/11540/3734
dc.description.abstractI analyze the risks in the banking systems in East Asia using the standard supervisory framework, which assesses capital adequacy, asset quality, management, earnings, and liquidity (CAMEL), I find that banking systems in the region are sound, but that the short-term outlook is negative. Second, I review the measures introduced in Asian countries to support their banking systems. The main bank support measures—direct capital support, removal and guarantees of bad assets, direct liquidity support, and guarantees for banks' existing or newly issued obligations—might be necessary to ensure stability, but they need to be handled carefully to prevent long-term distortions. It remains to be seen whether Asian policymakers will manage skillfully the lifting of bank support measures. Third, I conduct stress tests of the banking systems. The stress tests indicate that the largest banking systems in East Asia have a total of almost US$1.2 trillion in Tier 1 capital and a possible shortfall of US$758 billion. Fourth, I assess the implications for liquidity of the increase in international banking flows and find that the banking system in the Republic of Korea appears vulnerable to a reversal of capital flows. Fifth, I explore the implications of the crisis for credit formation, assessing whether nonbank financial institutions in the region have the capacity to provide sufficient liquidity. I conclude that they do not. The paper ends with a brief assessment of the impact of the crisis on the corporate sector, concluding that the effects of the crisis are likely to be significant but manageable.
dc.languageEnglish
dc.publisherAsian Development Bank
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.titleWhat Is the Impact of the Global Financial Crisis on the Banking System in East Asia?
dc.typeWorking Papers
dc.subject.expertEconomic Development
dc.subject.expertEconomic Infrastructure
dc.subject.expertEconomic Policies
dc.subject.expertRegional Economic Development
dc.subject.expertMicrofinance Programs
dc.subject.expertPublic Finance
dc.subject.expertLocal Financing
dc.subject.expertFinancial Stability
dc.subject.expertFinancial Sector Regulation
dc.subject.adbEnterprises
dc.subject.adbFinancial aid
dc.subject.adbEconomies in transition
dc.subject.adbLocal Finance
dc.subject.adbLocal Government
dc.subject.adbInsurance Companies
dc.subject.adbBanks
dc.subject.adbSocial Equity
dc.subject.naturalSocial responsibility of business
dc.subject.naturalAccounting
dc.subject.naturalPersonal budgets
dc.subject.naturalCost and standard of living
dc.subject.naturalBank accounts
dc.subject.naturalCredit control
dc.subject.naturalRegulatory reform
dc.subject.naturalBanks and banking
dc.title.seriesADBI Working Paper Series
dc.title.volume146
dc.contributor.imprintAsian Development Bank
oar.themeEconomics
oar.themeFinance
oar.adminregionEast Asia Region
oar.countryPeople's Republic of China
oar.countryHong Kong
oar.countryChina
oar.countryRepublic of Korea
oar.countryMongolia
oar.countryTaipei,China
oar.identifierOAR-004244
oar.authorPomerleano, Michael
oar.importtrue
oar.googlescholar.linkpresenttrue


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  • ADBI Working Papers
    The Asian Development Bank Institute (ADBI) Working Paper series is a continuation of the formerly named Discussion Paper series which began in January 2003. The numbering of the papers continued without interruption or change. ADBI was established in 1997 in Tokyo, Japan, to help build capacity, skills, and knowledge related to poverty reduction and other areas that support long-term growth and competitiveness in developing economies in Asia and the Pacific.

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