Determinants of Zombie Banks in Emerging Markets and Developing Economies

Wezel, Torsten

doi:10.5089/9798400267888.001

IMF Working Papers

2024

DOI: 10.5089/9798400267888.001

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Determinants of Zombie Banks in Emerging Markets and Developing Economies

Torsten Wezel

Abstract: 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.

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The impact of Covid‐19 on banking groups’ balance sheets in the euro area

Agoraki,

Kouretas,

Nadal De Simone

2024

Financial Market

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Most studies have found that the Covid‐19 pandemic did not negatively impact the euro area banking industry's performance at an aggregate level. This study explores whether this finding still holds using the return on assets of 16 banking groups operating in the euro area and considering bank‐specific factors, idiosyncrasies related to different exposures of their portfolios to the business cycle and weaknesses stemming from underlying structural vulnerabilities. The banking groups are classified into clusters using unsupervised learning techniques. This research contributes to the empirical literature on the determinants of banks’ performance by highlighting the importance of banks’ heterogeneity, notably controlling for differential performance due to asset quality, solvency and business model. In addition, this paper shows that the magnitude of return on assets’ exposure to the business cycle varies across banks and that inflation in the euro area matters only for a subset of them. Importantly, the study sheds some light on the possible reasons for the mixed results in the literature regarding the role of non‐interest income, the T1 capital ratio and inflation. Finally, no significant effects of the Covid‐19 variables on banks’ return on assets are found during the first seven quarters of the pandemic.

show abstract

The impact of Covid‐19 on banking groups’ balance sheets in the euro area

Agoraki,

Kouretas,

Nadal De Simone

2024

Financial Market

View full text Add to dashboard Cite

show abstract

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Determinants of Zombie Banks in Emerging Markets and Developing Economies

Cited by 1 publication

References 35 publications

The impact of Covid‐19 on banking groups’ balance sheets in the euro area

The impact of Covid‐19 on banking groups’ balance sheets in the euro area

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