BIS paper compares current Asian vulnerabilities with 1997 crisis

Global banking statistics could have given warning signals ahead of Asian crisis, authors say
asia-globe- roll-out

The Bank for International Settlements’ global banking statistics shed light on current vulnerabilities in Asia, and could have given some early warning signs ahead of the 1997 Asian crisis, according to a new working paper.

BIS economists Stefan Avdjiev, Bat-el Berger and Hyun Song Shin find that one of the most striking signals ahead of 1997 was the rapid build-up of cross-border bank claims on each of the five countries that ended up at the heart of the crisis.

Foreign banks tended to move money into countries through their local branches and subsidiaries, before lending it to the non-bank private sector.

Maturities tended to be short and much of the debt was denominated in foreign currencies, particularly the US dollar and, to a lesser extent, the yen.

Recently, emerging markets have seen a similar build-up of foreign currency denominated debt, particularly debt securities, which rose at an annual rate of 17% since the end of 2017.

“As intermediation migrates from banks to bond markets, credit conditions are more vulnerable than before to a snapback of long-term interest rates and increased volatilities,” the authors warn.

  • LinkedIn  
  • Save this article
  • Print this page  

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here:

You are currently unable to copy this content. Please contact [email protected] to find out more.

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: