Emerging Market Bank Lending and Credit Risk Control

Evolving Strategies to Mitigate Credit Risk, Optimize Lending Portfolios, and Check Delinquent Loans

Leonard Onyiriuba

• Publisher: Academic Press
• Year: 2015
• Print ISBN: 9780128034385
• eBook ISBN: 9780128034477
• Topic: Law
• Subtopic: Banks & Banking
• Index: Law

Using a framework of volatile markets Emerging Market Bank Lending and Credit Risk Control covers the theoretical and practical foundations of contemporary credit risk with implications for bank management. Drawing a direct connection between risk and its effects on credit analysis and decisions, the book discusses how credit risk should be correctly anticipated and its impact mitigated within framework of sound credit culture and process in line with the Basel Accords.This is the only practical book that specifically guides bankers through the analysis and management of the peculiar credit risks of counterparties in emerging economies. Each chapter features a one-page overview that introduces its subject and its outcomes. Chapters include summaries, review questions, references, and endnotes.- Emphasizes bank credit risk issues peculiar to emerging economies- Explains how to attain asset and portfolio quality through efficient lending and credit risk management in high risk-prone emerging economies- Presents a simple structure, devoid of complex models, for creating, assessing and managing credit and portfolio risks in emerging economies- Provides credit risk impact mitigation strategies in line with the Basel Accords

Part I

Background, the Setting and Perspective

Outline

Overview of the Subject Matter

Chapter 1. Questions in the Making of Emerging Economies and Markets

Chapter 2. Conceptual Survey of Risk and Its Applications in Banking

Chapter 3. Insights into Bank Credit Risk Issues in Emerging Economies

Chapter 4. Putting the Bank Lending Process in Emerging Markets into Perspective

Chapter 5. Bank Credit versus Equity and Economic Performance of Emerging Markets

Overview of the Subject Matter

Outline

Chapter 1. Questions in the Making of Emerging Economies and Markets

Chapter 2. Conceptual Survey of Risk and Its Applications in Banking

Chapter 3. Insights into Bank Credit Risk Issues in Emerging Economies

Chapter 4. Putting the Bank Lending Process in Emerging Markets into Perspective

Chapter 5. Bank Credit versus Equity and Economic Performance of Emerging Markets

Chapter 1

Questions in the Making of Emerging Economies and Markets

Abstract

This chapter reviews economic development concepts and debate from a historical perspective. It demonstrates how the debate informs current thinking on the meaning and inner workings of development. Findings from the literature are related to empirical evidence that sheds light on the plight of ordinary people in developing countries. In doing so, it defines emerging economies within the broader context of social change, thus underscoring contemporary issues in the making of emerging economies. Then emerging economies, developing nations, and developed nations are compared. In this way it is easy to distill the intricacies of doing business in emerging economies from the analysis. As applied in economics, the term “market” is explored to establish whether and how well it informs the concept of emerging markets. Also investigated is whether emerging markets and emerging economies are synonymous—and, if they are not, how they contrast.

Keywords

Developed nations; Developing countries; Economic development; Emerging economies; Emerging markets

Chapter Outline

Learning Focus and Outcomes 5

Setting the Scene 6

Risk in Countries Evolving into Emerging Economies 8

Ethnicity Fueled by Alien Political Models 9

Militant and Terrorist Activities 9

Military Incursion into Politics 10

Politicization of Civil Service 11

Background—A Historical Perspective 15

Developed, Developing, and Emerging Economies 17

Lessons of the Asian Tiger, BRICS, and Tiger Economies 18

Strictly Defining Emerging Economies 19

Comparing Emerging Economies with Emerging Markets 22

Questions for Discussion and Review 23

Learning Focus and Outcomes

The post–World War II era witnessed a long-running debate over the meaning and connotation of economic development. The debate continued into the 1970s and remained unsettled at the turn of the century. The contending issues were underlain by the development crisis of that epoch, ostensibly reflecting a lack of consensus on an approach to economic development analysis. Writers on the subject, most of whom were renowned economists, did not take sides—thus fostering the debate.

The contentious issues bordered on seeming anger at the frustrating life that was the lot of ordinary people in the so-called “Third World” countries. Economists evolved constructs, some of which had conflicting connotations, to picture and depict this situation. They did so in largely contrasting ways, apparently in search of appropriate characterization of the development phenomenon. Unfortunately, the quest for consensus remained elusive. Thus the debate raged on.

In this chapter I review the historical context of the debate. Then I demonstrate how the debate informed current thinking on the meaning and inner workings of development. I take a stand on the question of economic development, one that clarifies the context of this book. I define emerging economies within the broader context of social change. The objective in doing so is to appreciate the intricacies of doing business in emerging economies.

I explore the term “market” as applied in economic analysis to establish whether and how it informs the concept of emerging markets. In doing so, I investigate whether emerging markets and emerging economies are synonymous—and if they are not, how they are different. I draw conclusions based on the industrializing experiences of the BRICS, Asian Tiger, and Tiger economies. The reader will learn about:

• Concepts used by economists to denote levels of development attained by different countries and regions of the world

• Issues in the historical context of the debate over the meaning and applications of economic development constructs

• How the debate has influenced current thinking on, and understanding of, the concept and inner workings of economic development

• What constitutes “development” in practical terms based on evidence of the plight of ordinary people in emerging economies

• The definitions and meanings of, as well as differences and relationships between, emerging economies and eme...

Table of contents

• Cover image
• Title page
• Table of Contents
• Statement
• Copyright
• Dedication
• About the Author
• Preface
• Acknowledgments
• Part I. Background, the Setting and Perspective
• Part II. Bank Credit Markets, Taxonomies and Risk Control
• Part III. Credit Risk Dynamics, Analysis, and Management
• Part IV. Asset Portfolio Quality, Risk and Control
• Index