Building Resilient Banking Sectors in the Caucasus and Central Asia

By Mercedes Vera Martin, Tarak Jardak, Robert Tchaidze, Juan P Trevino, Helen W Wagner

July 6, 2018

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Mercedes Vera Martin, Tarak Jardak, Robert Tchaidze, Juan P Trevino, and Helen W Wagner. Building Resilient Banking Sectors in the Caucasus and Central Asia, (USA: International Monetary Fund, 2018) accessed December 22, 2024

Disclaimer: The views expressed herein are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

External shocks since 2014—lower oil prices and slower growth in key trading partners—have put financial sectors, mainly banks, in the eight Caucasus and Central Asia (CCA) countries under increased stress. Even before the shocks, CCA banking sectors were not at full strength. Asset quality was generally weak, due in part to shortcomings in regulation, supervision, and governance. The economies were highly dollarized. Business practices were affected by lack of competition and, in most countries, connected lending, which undermined banking sector health. Shortcomings in financial regulation and supervision allowed the unsound banking practices to remain unaddressed. The external shocks exacerbated in these underlying vulnerabilities. Strains in CCA banking sectors intensified as liquidity tightened, asset quality deteriorated, and banks became undercapitalized. These challenges have required public intervention in some cases.

Subject: Bank resolution framework, Banking, Commercial banks, Credit, Deposit insurance, Financial crises, Financial institutions, Loans, Money, Nonperforming loans

Keywords: Bank, Bank corporate governance, Bank management, Bank nationalization, Bank resolution framework, Banking sector, CCA country, Central Asia and the Caucasus, Central bank, Commercial banks, Credit, Diversification strategy, DP, DPPP, Global, Loans, Nonperforming loan, Nonperforming loans, Nonviable bank, Problem bank, Public funds

Publication Details

Pages:

49
Volume:

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DOI:

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Issue:

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Series:

Departmental Paper No. 2018/010
Stock No:

BRBSCCEA
ISBN:

9781484360774
ISSN:

2616-5333

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