Figure 1.23
Private sector credit to GDP, median value, 2000–08 Ratio 1.25
East Asia
1.00
Group 1
0.75
Group 2 Group 4
0.50
Group 3 Group 5
0.25 0.00
Group 6
2000
2001
2002
2003
2004
2005
2006
2007
2008
Note: East Asia denotes the median values for Indonesia, Korea, Malaysia, and Thailand for 1990– 98; this data is superimposed on 2000–08 in the charts for the different groups of ECA countries. Source: IMF World Economic Outlook, World Bank World Development Indicators, and authors’ calculations.
Figure 1.24
Loans to deposits, median value, 2000–08 Ratio 2.5
Group 1
2.0 Group 2
East Asia
1.5
Group 5
1.0
Group 3 Group 4
0.5 0.0
Group 6
2000
2001
2002
2003
2004
2005
2006
2007
2008
Note: East Asia denotes the median values for Indonesia, Korea, Malaysia, and Thailand for 1990– 98; this data is superimposed on 2000–08 in the charts for the different groups of ECA countries. Source: IMF World Economic Outlook, World Bank World Development Indicators, and authors’ calculations.
Together the charts have two implications. First, there has been increasing reliance on direct borrowing from parent banks and on wholesale funding abroad. It is also worth noting that the increase among the countries of East Asia hit by the emerging market crisis of 1997–98 was not as pronounced, in line with the more limited role of parent banks in the buildup of vulnerabilities. Second, while deposits are typically the cheapest source of funding, parent bank expansion strategies relied heavily on foreign financing sources that were on-lent in foreign exchange to unhedged borrowers. 44
Turmoil at Twenty