Sudden Stops,Robust Features And Differences In Bank Loans

With the continuous development of economic globalization, accompanied by frequent transactions between countries and regions, and international capital flows are increasingly large and frequent. And because the global economy is increasingly close, a state or regional economic development and economic development of other countries have not completely isolated. Similarly, the economic risks are increasingly showing a contagion effect. On the one hand, emerging market countries, which develop fast, have large population and financial development started late and the system against the risk are still inadequate, prone to financial risk and vulnerability to external financial risks, and thereby spread to other countries, thus causing even the global financial crisis. On the other hand, emerging market countries due to the immaturity of capital market development, the domestic banking system played a key role to support the financial system and withstand the risks of the financial. Therefore, to research the case of emerging market countries' banking systems which have different sound characteristics suffered “sudden stops” helps us to recognize emerging markets' risk system and prevent the occurrence of an extreme case of the financial crisis.In this paper, the growth of bank loans to reflect the impact of changes when “sudden stops” take place. We use annual financial statement data of years between 1996 and 2012 of commercial banks from 31 emerging countries around the world, and studied commercial bank credit in emerging market economies if there are differences in cross-section from the macroeconomic level and banking soundness level using empirical methods. The research shows that in most cases, “sudden stops” will lead to a sharp drop in the volume of commercial banks' credit, which is restricted by banks' specific capital background and policy environment. And generally speaking, economic growth, capital adequacy, liquidity and foreign equity have played a more significant stabilizing role in weakening the adverse effects of commercial banks' credit in a “sudden stops”. However, there is no sufficient evidence to show that for the growth of bank loans of all the banks in emerging market countries, larger banks all have a significant advantage of slowing down the shocks. And there is also no unanimous conclusion indicates currency mismatch is an important factor affecting the growth of bank credit.Finally, we put forward policy recommendations based on our findings. Fist, to prevent the impact of “sudden stops”, we must keep economic development stable and rapid, thus to create a stable macroeconomic and policy environment for international capital, and reduce the likelihood of capital emergency stop occurred. For emerging market countries or the country where bank is financial system's core need to build a robust banking system to reduce the impact of international capital flows stop, thereby reducing the impact on the real economy. And build a sound banking system will need to continue to deepen the reform of financial system which as the reform of banking sector as the core, to enhance competitiveness and risk-taking ability of banking system; the same time, opening up the capital account must also as a solid banking system as a premise.