An Assessment of Financial Sector Development in Bhutan
Cole, Rebel A.; Carrington, Sarah | August 2016
Abstract
This paper presents the results of an investigation into the performance and stability of Bhutan’s banking system. The study has found that economic growth has fueled a large demand for household credit over recent years, and in turn, banks have responded by substantially increasing their loan portfolios. Private sector credit growth took off from its earlier steady pace in the years preceding 2008, reaching over 40% growth year-on-year in the 2009-10 fiscal year, and has retained a relatively high growth rate even as heavy import restrictions remain in place. Although the largest recipient of credit is the building and construction sector, personal loans now make up more than 18% of credit extended to the private sector. And while non-performing loans have decreased substantially from their peak of close to 40% in the mid-1990s, they are still relatively high, and are decreasing as much due to total private sector credit growth as they are to loan recovery rates. Within this context, this paper discusses policy recommendations to strengthen and improve the banking sector. These policy measures include fostering banking sector competition, improving regulatory practices—on both the monitoring and the enforcement side—and enhancing risk diversification and liquidity management practices.
Citation
Cole, Rebel A.; Carrington, Sarah. 2016. An Assessment of Financial Sector Development in Bhutan. © Asian Development Bank. http://hdl.handle.net/11540/7599. License: CC BY 3.0 IGO.ISSN
2313-5867 (Print)
2313-5875 (e-ISBN)
Keywords
Cultural Development
Development Economics
Development Issues
Financial Sector Development
Infrastructure Development
Urban Development Finance
Financing
Financial System
Financial Sector Reform
Financial Institution
Bank Financing
Rural planning
Economic development
Economic indicators
Standard of living
Development projects
Development policy
Housing projects
Development models
Social reform
Urban planning
Public Borrowing
Credit Policy
Banks
Real estate development
Housing development
Community banks
Mortgage banks
Housing policy
Tax administration and procedure
Real property and taxation
Property tax
Credit control
Banks and banking
Title companies
Tax deductions
Accounts
Savings
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