Abnormal Loan Growth, Credit Information Sharing and Systemic Risk in Asian Banks

Research in International Business and Finance (Forthcoming)

25 Pages Posted: 6 Jul 2017

See all articles by Wahyoe Soedarmono

Wahyoe Soedarmono

Sampoerna University - Faculty of Business

Djauhari Sitorus

World Bank

Amine Tarazi

University of Limoges - Faculty of Law and Economic Science

Date Written: July 3, 2017

Abstract

This paper investigates the interplay of abnormal loan growth, credit reporting system and systemic risk in banking. Based on a sample of publicly traded banks in Asia from 1998 to 2012, higher abnormal loan growth leads to higher systemic risk one year ahead. A closer investigation further suggests that better credit information coverage and private credit bureaus can stem the buildup of bank systemic risk one year ahead due to higher abnormal loan growth. Eventually, this paper offers some supports to strengthen macro-prudential regulation to limit abnormal loan growth. This paper also advocates the importance of strengthening credit information coverage and the role of private credit bureaus in Asian countries to mitigate the negative impact of abnormal loan growth on bank systemic stability.

Keywords: Abnormal loan growth, systemic risk, credit reporting system, Asian banks

JEL Classification: G21, G28

Suggested Citation

Soedarmono, Wahyoe and Sitorus, Djauhari and Tarazi, Amine, Abnormal Loan Growth, Credit Information Sharing and Systemic Risk in Asian Banks (July 3, 2017). Research in International Business and Finance (Forthcoming), Available at SSRN: https://ssrn.com/abstract=2996687

Wahyoe Soedarmono (Contact Author)

Sampoerna University - Faculty of Business ( email )

Jl. Raya Pasar Minggu, Kav. 16
Jakarta, Pancoran 12780
Indonesia

Djauhari Sitorus

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Amine Tarazi

University of Limoges - Faculty of Law and Economic Science ( email )

5 rue Felix Eboue
Limoges, 87000
France

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