Determinants of Zombie Banks in Emerging Markets and Developing Economies
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Summary:
While deeply undercapitalized banks have been shown to misallocate credit to weak firms, the drivers of such zombie banks are less researched, particularly across countries. To furnish empirical evidence, we compile a dataset of undercapitalized banks from emerging markets and developing economies. We classify zombie banks as those not receiving remedial treatment by owners or regulators or, alternatively, remaining chronically undercapitalized. Using logit regressions, we find that country-specific factors are more influential for zombie status than bank characteristics, alhough some become significant when disaggreating by region. The paper’s overall findings imply the need for a proper regulatory framework and an effective resolution regime to deal with zombie banks more decisively.
Series:
Working Paper No. 2024/036
Subject:
Bank resolution Banking crises Credit Financial crises Money Public debt
Frequency:
regular
English
Publication Date:
February 23, 2024
ISBN/ISSN:
9798400267888/1018-5941
Stock No:
WPIEA2024036
Format:
Paper
Pages:
36
Please address any questions about this title to publications@imf.org