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This paper uses the standard one-sector neoclassical growth model to investigate why China's consumption has been low and investment high. It finds that the low cost of capital has been quantitatively an important factor. Theory predicts that the price of capital may have been significantly distorted in the 1990s and 2000s. The distortion could have been caused by nonperforming loans, borrowing constraints, and uncertainty over changes in government guidance in bank lending. If China is to rebalance growth towards relying more on consumption and less on exports and investment, banking sector reforms and financial market development could, therefore, turn out to be key.

Business cycles --- Economic development --- Capital market --- Consumption (Economics) --- Investments --- Finance --- Econometric models. --- China --- Economic policy. --- Economic cycles --- Economic fluctuations --- Cycles --- Banks and Banking --- Macroeconomics --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Macroeconomics: Consumption --- Saving --- Wealth --- General Aggregative Models: General --- Banking --- Consumption --- Nonperforming loans --- Loans --- National accounts --- Economics --- Banks and banking --- National income --- China, People's Republic of

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The paper provides an empirical analysis of aggregate banking system ratios during systemic banking crises. Drawing upon a wide cross-country dataset, we utilize parametric and nonparametric tests to assess the power of these ratios to discriminate between sound and unsound banking systems. We also estimate a duration model to investigate whether the ratios help determine the timing of a banking crisis. Despite some weaknesses in the available data, our findings offer initial evidence that some indicators are precursors for the likelihood and timing of systemic banking problems. Nevertheless, we caution against sole reliance on these indicators and advocate supplementing them with other tools and techniques.

Banks and Banking --- Finance: General --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Crises --- General Financial Markets: Government Policy and Regulation --- Banking --- Finance --- Economic & financial crises & disasters --- Commercial banks --- Banking crises --- Financial soundness indicators --- Nonperforming loans --- Banks and banking --- Financial crises --- Financial services industry --- Loans --- Mexico --- Bank examination --- Bank failures --- Econometric models.

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Sizable risk capital from outside may be necessary to accelerate Japan's corporate restructuring to replace the stock of impaired bank loans. To attract risk capital, impaired loans must find market-clearing prices. However, the asymmetry in the bid-ask prices faced by banks and distressed-debt investors continues to stall efforts to create a liquid distressed-debt market. This paper asserts that the wedge between the prices faced by different participants is primarily a result of different valuation methods employed by banks and distressed-debt investors. On the one hand, banks do not recognize "maturity default" that results in banks rolling over impaired-loan accounts, effectively turning them into perpetual debt, which is expected to capture any upside potential for value. On the other hand, distressed-debt investors presently view their investments as equity stakes that require improved cash flows, unlike the buy-and-sell distressed-collateral market that existed in the mid-1990s. We suggest that bids from distressed-debt investors may not be as low as they are deemed by local banks and the asymmetry in prices may be reduced if banks value their claims as corporate equity.

Bank loans --- Corporate debt --- Bank failures --- Failure of banks --- Business failures --- Corporations --- Debt --- Debt financing (Corporations) --- Finance --- Banks and Banking --- Finance: General --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- General Financial Markets: Government Policy and Regulation --- Banking --- Loans --- Distressed assets --- Collateral --- Nonperforming loans --- Banks and banking --- Japan

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The rapid growth of the financial system presents a number of challenges to maintaining financial stability in Nepal. There has been a rapid growth of the banking sector over the last few years. State-owned institutions continue to dominate the banking system. Equity market capitalization has increased sharply while government debt markets remain underdeveloped. Despite a challenging macroeconomic environment, the financial performance of the banking system has improved. The rapid increase in credit growth in recent years suggests growing credit risk.

Banks and Banking --- Finance: General --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- General Financial Markets: General (includes Measurement and Data) --- General Financial Markets: Government Policy and Regulation --- Banking --- Finance --- Commercial banks --- State-owned banks --- Stock markets --- Bank soundness --- Financial institutions --- Financial markets --- Financial sector policy and analysis --- Nonperforming loans --- Banks and banking --- Stock exchanges --- Loans --- Nepal --- Debts, Public --- Budget deficits

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This Selected Issues paper reviews the vulnerability and risks associated with Benin’s banking sector. Banks in Benin show significant vulnerabilities. Although financial soundness indicators do not present immediate stability concern, the quality of banks’ loan portfolio is low and has constrained credit to the private sector. Stress tests confirm that credit risk is of particular concern. Structural impediments are at the root of these risks, including problems with property titles, information asymmetries, and the weak judiciary, which complicates contract enforcement. Structural reforms and a re-calibration of fiscal policies to reduce the government’s lending needs are necessary to mitigate these risks over time.

Banks and Banking --- Money and Monetary Policy --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Financial Institutions and Services: Government Policy and Regulation --- Banking --- Finance --- Monetary economics --- Credit --- Nonperforming loans --- Commercial banks --- Loans --- Money --- Financial institutions --- Financial services --- Banks and banking --- Financial services industry --- Benin