IMF paper studies credit growth in the Philippines
A working paper published by the International Monetary Fund in May looks at factors affecting credit growth and interest margins in the Philippines and Asia.
Author Tatum Blaise Pua Tan points out that despite robust deposit growth, credit growth has been sluggish in the Philippines.
The research attributes this to legacy weaknesses in bank balance sheets, consumption-led economic growth, and relatively high net interest margins. Meanwhile, bank-level analysis suggests interest margins in the Philippines rise with bank size, bank capitalisation, foreign ownership, overhead costs and tax rates.
Using bank-level data for a number of Asian economies, the paper finds that higher growth, lower inflation, higher reserve requirements, greater banking sector development, smaller stock market development and lower government deficits all reduce net interest margins.
Click here to read the paper.
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