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Resource Library

Resource(s) Found: 4

October 29, 2012

Growing Asian credit card markets amid the global financial crisis

Author: Tae Soo Kang and Guonan Ma


" Credit card lending in Asia has grown rapidly since the 1997 Asian financial crisis and has much room to expand. But this growth so far has seen several episodes of sharp booms and busts, posing new risks to financial stability. This paper attempts to learn more about the credit card markets and shed light on and draw lessons from some of the core common elements in the three recent episodes of credit card lending distress in Asia. Of the episodes in Hong Kong, Korea and Taiwan during the 2000s, Korea experienced the most serious boom-bust cycle in 2003. Therefore we take a closer look at the credit card lending crisis there. Easy monetary conditions, financial liberalisation, economies of scales in the credit card business, limited information reporting and sharing, various forms of the principal-agent problem, and the seasoning effect of a fast-growing lending portfolio all contributed to unsustainable credit lending boom. Eventually, excessive indebtedness led to rising credit cost and caused greater caution, tighter lending standard, contracting credit, further credit loss, prolonged balance sheet adjustments, risks to the broader financial system and damages to the real economy. Policymakers in large Asian emerging markets such as China and India need to learn more about the risks arising from this type of consumer lending and respond with enhanced supervisory capacity, better market infrastructure, and appropriate prudential measures."


Keywords: credit card, lending, asia, GDP, boom, bust


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October 29, 2012

South Korea technology: Risk overview

Author: Economist Intelligence Unit


"Overall, the risks of operating in South Korea are low. Although tensions between South and North Korea have increased since May 2010, the risk of a major inter-Korean conflict over the short term is limited. Despite a volatile party political scene, democracy is firmly entrenched. Macroeconomic risk will remain relatively elevated owing to the risk that the global economy could suffer from a double-dip recession. Government effectiveness risk has fallen as the Grand National Party controls both the presidency and parliament, but the lack of transparency and flexibility of the bureaucracy remains a concern. Government influence on the legal and regulatory environment is also a risk. Infrastructure risk is heightened by problems with road congestion."


Keywords: risk, assessment, South Korea, security, political stability, government, legal, regulatory, macroeconomic


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October 29, 2012

The Basel Committee’s response to the financial crisis: report to the G20

Author: Bank for International Settlements


The Basel Committee on Banking Supervision and its oversight body, the Group of Governors and Heads of Supervision1, have developed a reform programme to address the lessons of the crisis, which delivers on the mandates for banking sector reforms established by the G20 at their 2009 Pittsburgh summit. This report, which the Committee is submitting to the G20, details the key elements of the reform programme and future work to strengthen the resilience of banks and the global banking system. The depth and severity of the crisis were amplified by weaknesses in the banking sector such as excessive leverage, inadequate and low-quality capital, and insufficient liquidity buffers. The crisis was exacerbated by a procyclical deleveraging process and the interconnectedness of systemically important financial institutions. In response, the Committee’s reforms seek to improve the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source, thus reducing the risk of spill over from the financial sector to the real economy. The reforms strengthen bank-level, or micro prudential, regulation, which will help raise the resilience of individual banking institutions in periods of stress.


Keywords: G20, financial crisis, risk coverage, liquidity, risk management, risk supervision, market discipline


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October 25, 2012

The Basel Committee’s response to the financial crisis: report to the G20

Author: Bank for International Settlements


The Basel Committee on Banking Supervision and its oversight body, the Group of Governors and Heads of Supervision1, have developed a reform programme to address the lessons of the crisis, which delivers on the mandates for banking sector reforms established by the G20 at their 2009 Pittsburgh summit. This report, which the Committee is submitting to the G20, details the key elements of the reform programme and future work to strengthen the resilience of banks and the global banking system. The depth and severity of the crisis were amplified by weaknesses in the banking sector such as excessive leverage, inadequate and low-quality capital, and insufficient liquidity buffers. The crisis was exacerbated by a procyclical deleveraging process and the interconnectedness of systemically important financial institutions. In response, the Committee’s reforms seek to improve the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source, thus reducing the risk of spill over from the financial sector to the real economy. The reforms strengthen bank-level, or micro prudential, regulation, which will help raise the resilience of individual banking institutions in periods of stress. Keywords: G20, financial crisis, risk coverage, liquidity, risk management, risk supervision, market discipline


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