Macroeconomic Shocks and Banking Sector Developments in Egypt
From 2008 to 2011, Egypt was hit by significant shocks, both global and country-specific. This paper assesses the impact of the resulting macroeconomic instability on the banking sector, and examines its role as a shock absorber. The Central Bank o...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/01/17172327/macroeconomic-shocks-banking-sector-developments-egypt-macroeconomic-shocks-banking-sector-developments-egypt http://hdl.handle.net/10986/12179 |
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okr-10986-12179 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ADMINISTRATIVE CONTROL ADMINISTRATIVE CONTROLS AGRICULTURAL CREDIT ALTERNATIVE FUNDING ASSET PRICES BALANCE OF PAYMENTS BALANCE OF PAYMENTS CRISIS BALANCE SHEET BALANCE SHEETS BANK BRANCHES BANK DEPOSIT BANK DEPOSITS BANK INTERMEDIATION BANK LENDING BANK LOAN BANK PROFITABILITY BANKING LAW BANKING SECTOR BANKING SECTOR DEVELOPMENTS BANKING SYSTEM BIDS BONDS BORROWING COSTS BUDGET CONSTRAINT BUDGET DEFICIT CAPITAL ACCOUNT CAPITAL ADEQUACY CAPITAL BASE CAPITAL FLOW CAPITAL FLOWS CAPITAL GAINS CAPITAL INFLOW CAPITAL INFLOWS CAPITAL OUTFLOW CAPITAL OUTFLOWS CAPITAL REQUIREMENT CAPITALIZATION CASH FLOW CASH HOLDING CASH HOLDINGS CENTRAL BANK CERTIFICATES OF DEPOSIT CHECKS COMMERCIAL BANK COMMERCIAL BANK CREDIT COMMERCIAL BANKS COMPETITIVE MARKETS CREDIBILITY CREDIT AVAILABILITY CREDIT EXPANSION CREDIT GROWTH CREDIT RISK DEBT ISSUER DEBT LEVEL DEBT LEVELS DEBT RATIO DEBT SERVICE DEBTORS DEBTS DEFICITS DEMAND FOR CREDIT DEPOSIT DEPOSITS DEVELOPING COUNTRIES DEVELOPMENT BONDS DOMESTIC BANKS DOMESTIC CAPITAL DOMESTIC CAPITAL MARKETS DOMESTIC CURRENCY DOMESTIC DEBT DUMMY VARIABLE EMERGING ECONOMIES EXCHANGE RATE FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL LIBERALIZATION FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL SECTOR DEVELOPMENTS FINANCIAL SYSTEM FISCAL DEFICIT FISCAL POLICY FIXED EXCHANGE RATE FOREIGN BANK FOREIGN CURRENCY FOREIGN INVESTORS FUTURE CREDIT GLOBAL CAPITAL GLOBAL CAPITAL MARKETS GOVERNMENT ACCOUNTS GOVERNMENT BONDS GOVERNMENT BORROWING GOVERNMENT BUDGET GOVERNMENT DEBT GOVERNMENT EXPENDITURES GOVERNMENT PAPER GOVERNMENT REVENUES GOVERNMENT SAVINGS GOVERNMENT SECURITIES GOVERNMENT SPENDING GROSS DOMESTIC PRODUCT HOLDING HOLDINGS HOLDINGS OF GOVERNMENT SECURITIES IMPLICIT TAX IMPLICIT TAXES INCOME TAX INFLATION INFLATION RATE INFORMATION TECHNOLOGY INSTRUMENT INSURANCE INSURANCE COMPANIES INTEREST COSTS INTEREST PAYMENTS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL STANDARDS INVESTMENT BANK INVESTMENT IN GOVERNMENT SECURITIES INVESTMENTS IN GOVERNMENT SECURITIES ISSUANCE JUDICIAL SYSTEM LABOR MARKET LEGAL FRAMEWORKS LIQUIDITY LIQUIDITY CRISES LOAN LOAN PORTFOLIO LOAN QUALITY LOANABLE FUNDS LOCAL CURRENCY LOCAL INVESTORS LONG-TERM LOANS MACROECONOMIC ENVIRONMENT MACROECONOMIC INSTABILITY MACROECONOMIC VARIABLES MARKET BORROWING MARKET FOR CREDIT MARKET MECHANISMS MARKET YIELDS MATURITY MATURITY STRUCTURE MINIMUM CAPITAL REQUIREMENTS MONETARY POLICY MONEY MARKET MONEY SUPPLY MUTUAL FUNDS NATIONAL INVESTMENT NON-PERFORMING LOANS NONPERFORMING LOANS NPL OIL PRICES OPEN ECONOMY OPEN MARKET OUTSTANDING DEBT OWNERSHIP STRUCTURE POLITICAL UNCERTAINTY PORTFOLIO QUALITY POST OFFICE POST OFFICE SAVINGS PRICE CHANGES PRICE STABILITY PRIVATE BANKS PRIVATE CREDIT PRIVATE SECTOR CREDIT PROBABILITY OF DEFAULT PRODUCTIVE INVESTMENT PRODUCTIVE INVESTMENTS PRUDENTIAL REGULATIONS PUBLIC BANK PUBLIC BANKS PUBLIC BUDGET PUBLIC DEBT PUBLIC DEBT HOLDINGS PUBLIC FINANCE PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC SPENDING REAL INTEREST REAL INTEREST RATES REGULATORY FRAMEWORK REPO REPO FACILITY RESERVE RESERVE REQUIREMENTS RESERVES RETURN RETURNS RISK MANAGEMENT RISK OF DEFAULT SAVINGS ACCOUNTS SAVINGS DEPOSITS SAVINGS INSTRUMENTS SETTLEMENT SOCIAL CAPITAL SOCIAL INSURANCE FUND SOLVENCY SOVEREIGN ENTITIES STATE BANKS STOCK MARKET STOCK MARKET INDEX STRATEGIC INVESTOR SUB-NATIONAL ENTITIES SUPPLY OF CREDIT T-BILL T-BILL MARKET T-BILL RATE T-BILL RATES T-BILLS TAX TAX RATE TAX RATES TAX SYSTEM TRADE LIBERALIZATION TRANSACTION TRANSPARENCY |
| spellingShingle |
ADMINISTRATIVE CONTROL ADMINISTRATIVE CONTROLS AGRICULTURAL CREDIT ALTERNATIVE FUNDING ASSET PRICES BALANCE OF PAYMENTS BALANCE OF PAYMENTS CRISIS BALANCE SHEET BALANCE SHEETS BANK BRANCHES BANK DEPOSIT BANK DEPOSITS BANK INTERMEDIATION BANK LENDING BANK LOAN BANK PROFITABILITY BANKING LAW BANKING SECTOR BANKING SECTOR DEVELOPMENTS BANKING SYSTEM BIDS BONDS BORROWING COSTS BUDGET CONSTRAINT BUDGET DEFICIT CAPITAL ACCOUNT CAPITAL ADEQUACY CAPITAL BASE CAPITAL FLOW CAPITAL FLOWS CAPITAL GAINS CAPITAL INFLOW CAPITAL INFLOWS CAPITAL OUTFLOW CAPITAL OUTFLOWS CAPITAL REQUIREMENT CAPITALIZATION CASH FLOW CASH HOLDING CASH HOLDINGS CENTRAL BANK CERTIFICATES OF DEPOSIT CHECKS COMMERCIAL BANK COMMERCIAL BANK CREDIT COMMERCIAL BANKS COMPETITIVE MARKETS CREDIBILITY CREDIT AVAILABILITY CREDIT EXPANSION CREDIT GROWTH CREDIT RISK DEBT ISSUER DEBT LEVEL DEBT LEVELS DEBT RATIO DEBT SERVICE DEBTORS DEBTS DEFICITS DEMAND FOR CREDIT DEPOSIT DEPOSITS DEVELOPING COUNTRIES DEVELOPMENT BONDS DOMESTIC BANKS DOMESTIC CAPITAL DOMESTIC CAPITAL MARKETS DOMESTIC CURRENCY DOMESTIC DEBT DUMMY VARIABLE EMERGING ECONOMIES EXCHANGE RATE FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL LIBERALIZATION FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL SECTOR DEVELOPMENTS FINANCIAL SYSTEM FISCAL DEFICIT FISCAL POLICY FIXED EXCHANGE RATE FOREIGN BANK FOREIGN CURRENCY FOREIGN INVESTORS FUTURE CREDIT GLOBAL CAPITAL GLOBAL CAPITAL MARKETS GOVERNMENT ACCOUNTS GOVERNMENT BONDS GOVERNMENT BORROWING GOVERNMENT BUDGET GOVERNMENT DEBT GOVERNMENT EXPENDITURES GOVERNMENT PAPER GOVERNMENT REVENUES GOVERNMENT SAVINGS GOVERNMENT SECURITIES GOVERNMENT SPENDING GROSS DOMESTIC PRODUCT HOLDING HOLDINGS HOLDINGS OF GOVERNMENT SECURITIES IMPLICIT TAX IMPLICIT TAXES INCOME TAX INFLATION INFLATION RATE INFORMATION TECHNOLOGY INSTRUMENT INSURANCE INSURANCE COMPANIES INTEREST COSTS INTEREST PAYMENTS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL STANDARDS INVESTMENT BANK INVESTMENT IN GOVERNMENT SECURITIES INVESTMENTS IN GOVERNMENT SECURITIES ISSUANCE JUDICIAL SYSTEM LABOR MARKET LEGAL FRAMEWORKS LIQUIDITY LIQUIDITY CRISES LOAN LOAN PORTFOLIO LOAN QUALITY LOANABLE FUNDS LOCAL CURRENCY LOCAL INVESTORS LONG-TERM LOANS MACROECONOMIC ENVIRONMENT MACROECONOMIC INSTABILITY MACROECONOMIC VARIABLES MARKET BORROWING MARKET FOR CREDIT MARKET MECHANISMS MARKET YIELDS MATURITY MATURITY STRUCTURE MINIMUM CAPITAL REQUIREMENTS MONETARY POLICY MONEY MARKET MONEY SUPPLY MUTUAL FUNDS NATIONAL INVESTMENT NON-PERFORMING LOANS NONPERFORMING LOANS NPL OIL PRICES OPEN ECONOMY OPEN MARKET OUTSTANDING DEBT OWNERSHIP STRUCTURE POLITICAL UNCERTAINTY PORTFOLIO QUALITY POST OFFICE POST OFFICE SAVINGS PRICE CHANGES PRICE STABILITY PRIVATE BANKS PRIVATE CREDIT PRIVATE SECTOR CREDIT PROBABILITY OF DEFAULT PRODUCTIVE INVESTMENT PRODUCTIVE INVESTMENTS PRUDENTIAL REGULATIONS PUBLIC BANK PUBLIC BANKS PUBLIC BUDGET PUBLIC DEBT PUBLIC DEBT HOLDINGS PUBLIC FINANCE PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC SPENDING REAL INTEREST REAL INTEREST RATES REGULATORY FRAMEWORK REPO REPO FACILITY RESERVE RESERVE REQUIREMENTS RESERVES RETURN RETURNS RISK MANAGEMENT RISK OF DEFAULT SAVINGS ACCOUNTS SAVINGS DEPOSITS SAVINGS INSTRUMENTS SETTLEMENT SOCIAL CAPITAL SOCIAL INSURANCE FUND SOLVENCY SOVEREIGN ENTITIES STATE BANKS STOCK MARKET STOCK MARKET INDEX STRATEGIC INVESTOR SUB-NATIONAL ENTITIES SUPPLY OF CREDIT T-BILL T-BILL MARKET T-BILL RATE T-BILL RATES T-BILLS TAX TAX RATE TAX RATES TAX SYSTEM TRADE LIBERALIZATION TRANSACTION TRANSPARENCY Herrera, Santiago Youssef, Hoda Macroeconomic Shocks and Banking Sector Developments in Egypt |
| geographic_facet |
Middle East and North Africa Egypt, Arab Republic of |
| relation |
Policy Research Working Paper; No. 6314 |
| description |
From 2008 to 2011, Egypt was hit by
significant shocks, both global and country-specific. This
paper assesses the impact of the resulting macroeconomic
instability on the banking sector, and examines its role as
a shock absorber. The Central Bank of Egypt accommodated the
shocks by supplying liquidity to the market. The paper
verifies a change in the fiscal regime from one in which the
primary fiscal balance was used an instrument to stabilize
the public debt ratio to one in which the policy instrument
stopped playing that role and affected investors'
assessment of the risk of holding public debt. This pattern
suggests that fiscal conditions influenced exchange rate and
price expectations originating a fiscal dominance situation
in which the Central Bank could not control inflation.
Hence, the Central Bank lacked functional independence in
spite of its de jure independence, which underscores the
importance of strengthening institutions that facilitate
policy coordination and allow policy to be more predictable.
The government also funds itself through non-market
mechanisms, in a typical financial repression scheme. The
paper estimates the revenue from financial repression at
about 2.5 percent of gross domestic product in 2011, which
together with the revenues from seignoriage add up to close
to 50 percent of the budgeted tax revenues, indicating the
need for an in-depth review of the governance of the public
banks and the funding of public sector activities. Finally,
the paper estimates the impact of shocks to macroeconomic
variables on loan portfolio quality and bank capital. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Herrera, Santiago Youssef, Hoda |
| author_facet |
Herrera, Santiago Youssef, Hoda |
| author_sort |
Herrera, Santiago |
| title |
Macroeconomic Shocks and Banking Sector Developments in Egypt |
| title_short |
Macroeconomic Shocks and Banking Sector Developments in Egypt |
| title_full |
Macroeconomic Shocks and Banking Sector Developments in Egypt |
| title_fullStr |
Macroeconomic Shocks and Banking Sector Developments in Egypt |
| title_full_unstemmed |
Macroeconomic Shocks and Banking Sector Developments in Egypt |
| title_sort |
macroeconomic shocks and banking sector developments in egypt |
| publisher |
World Bank, Washington, DC |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2013/01/17172327/macroeconomic-shocks-banking-sector-developments-egypt-macroeconomic-shocks-banking-sector-developments-egypt http://hdl.handle.net/10986/12179 |
| _version_ |
1764422166892249088 |
| spelling |
okr-10986-121792021-04-23T14:03:06Z Macroeconomic Shocks and Banking Sector Developments in Egypt Herrera, Santiago Youssef, Hoda ADMINISTRATIVE CONTROL ADMINISTRATIVE CONTROLS AGRICULTURAL CREDIT ALTERNATIVE FUNDING ASSET PRICES BALANCE OF PAYMENTS BALANCE OF PAYMENTS CRISIS BALANCE SHEET BALANCE SHEETS BANK BRANCHES BANK DEPOSIT BANK DEPOSITS BANK INTERMEDIATION BANK LENDING BANK LOAN BANK PROFITABILITY BANKING LAW BANKING SECTOR BANKING SECTOR DEVELOPMENTS BANKING SYSTEM BIDS BONDS BORROWING COSTS BUDGET CONSTRAINT BUDGET DEFICIT CAPITAL ACCOUNT CAPITAL ADEQUACY CAPITAL BASE CAPITAL FLOW CAPITAL FLOWS CAPITAL GAINS CAPITAL INFLOW CAPITAL INFLOWS CAPITAL OUTFLOW CAPITAL OUTFLOWS CAPITAL REQUIREMENT CAPITALIZATION CASH FLOW CASH HOLDING CASH HOLDINGS CENTRAL BANK CERTIFICATES OF DEPOSIT CHECKS COMMERCIAL BANK COMMERCIAL BANK CREDIT COMMERCIAL BANKS COMPETITIVE MARKETS CREDIBILITY CREDIT AVAILABILITY CREDIT EXPANSION CREDIT GROWTH CREDIT RISK DEBT ISSUER DEBT LEVEL DEBT LEVELS DEBT RATIO DEBT SERVICE DEBTORS DEBTS DEFICITS DEMAND FOR CREDIT DEPOSIT DEPOSITS DEVELOPING COUNTRIES DEVELOPMENT BONDS DOMESTIC BANKS DOMESTIC CAPITAL DOMESTIC CAPITAL MARKETS DOMESTIC CURRENCY DOMESTIC DEBT DUMMY VARIABLE EMERGING ECONOMIES EXCHANGE RATE FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL LIBERALIZATION FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL SECTOR DEVELOPMENTS FINANCIAL SYSTEM FISCAL DEFICIT FISCAL POLICY FIXED EXCHANGE RATE FOREIGN BANK FOREIGN CURRENCY FOREIGN INVESTORS FUTURE CREDIT GLOBAL CAPITAL GLOBAL CAPITAL MARKETS GOVERNMENT ACCOUNTS GOVERNMENT BONDS GOVERNMENT BORROWING GOVERNMENT BUDGET GOVERNMENT DEBT GOVERNMENT EXPENDITURES GOVERNMENT PAPER GOVERNMENT REVENUES GOVERNMENT SAVINGS GOVERNMENT SECURITIES GOVERNMENT SPENDING GROSS DOMESTIC PRODUCT HOLDING HOLDINGS HOLDINGS OF GOVERNMENT SECURITIES IMPLICIT TAX IMPLICIT TAXES INCOME TAX INFLATION INFLATION RATE INFORMATION TECHNOLOGY INSTRUMENT INSURANCE INSURANCE COMPANIES INTEREST COSTS INTEREST PAYMENTS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL STANDARDS INVESTMENT BANK INVESTMENT IN GOVERNMENT SECURITIES INVESTMENTS IN GOVERNMENT SECURITIES ISSUANCE JUDICIAL SYSTEM LABOR MARKET LEGAL FRAMEWORKS LIQUIDITY LIQUIDITY CRISES LOAN LOAN PORTFOLIO LOAN QUALITY LOANABLE FUNDS LOCAL CURRENCY LOCAL INVESTORS LONG-TERM LOANS MACROECONOMIC ENVIRONMENT MACROECONOMIC INSTABILITY MACROECONOMIC VARIABLES MARKET BORROWING MARKET FOR CREDIT MARKET MECHANISMS MARKET YIELDS MATURITY MATURITY STRUCTURE MINIMUM CAPITAL REQUIREMENTS MONETARY POLICY MONEY MARKET MONEY SUPPLY MUTUAL FUNDS NATIONAL INVESTMENT NON-PERFORMING LOANS NONPERFORMING LOANS NPL OIL PRICES OPEN ECONOMY OPEN MARKET OUTSTANDING DEBT OWNERSHIP STRUCTURE POLITICAL UNCERTAINTY PORTFOLIO QUALITY POST OFFICE POST OFFICE SAVINGS PRICE CHANGES PRICE STABILITY PRIVATE BANKS PRIVATE CREDIT PRIVATE SECTOR CREDIT PROBABILITY OF DEFAULT PRODUCTIVE INVESTMENT PRODUCTIVE INVESTMENTS PRUDENTIAL REGULATIONS PUBLIC BANK PUBLIC BANKS PUBLIC BUDGET PUBLIC DEBT PUBLIC DEBT HOLDINGS PUBLIC FINANCE PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC SPENDING REAL INTEREST REAL INTEREST RATES REGULATORY FRAMEWORK REPO REPO FACILITY RESERVE RESERVE REQUIREMENTS RESERVES RETURN RETURNS RISK MANAGEMENT RISK OF DEFAULT SAVINGS ACCOUNTS SAVINGS DEPOSITS SAVINGS INSTRUMENTS SETTLEMENT SOCIAL CAPITAL SOCIAL INSURANCE FUND SOLVENCY SOVEREIGN ENTITIES STATE BANKS STOCK MARKET STOCK MARKET INDEX STRATEGIC INVESTOR SUB-NATIONAL ENTITIES SUPPLY OF CREDIT T-BILL T-BILL MARKET T-BILL RATE T-BILL RATES T-BILLS TAX TAX RATE TAX RATES TAX SYSTEM TRADE LIBERALIZATION TRANSACTION TRANSPARENCY From 2008 to 2011, Egypt was hit by significant shocks, both global and country-specific. This paper assesses the impact of the resulting macroeconomic instability on the banking sector, and examines its role as a shock absorber. The Central Bank of Egypt accommodated the shocks by supplying liquidity to the market. The paper verifies a change in the fiscal regime from one in which the primary fiscal balance was used an instrument to stabilize the public debt ratio to one in which the policy instrument stopped playing that role and affected investors' assessment of the risk of holding public debt. This pattern suggests that fiscal conditions influenced exchange rate and price expectations originating a fiscal dominance situation in which the Central Bank could not control inflation. Hence, the Central Bank lacked functional independence in spite of its de jure independence, which underscores the importance of strengthening institutions that facilitate policy coordination and allow policy to be more predictable. The government also funds itself through non-market mechanisms, in a typical financial repression scheme. The paper estimates the revenue from financial repression at about 2.5 percent of gross domestic product in 2011, which together with the revenues from seignoriage add up to close to 50 percent of the budgeted tax revenues, indicating the need for an in-depth review of the governance of the public banks and the funding of public sector activities. Finally, the paper estimates the impact of shocks to macroeconomic variables on loan portfolio quality and bank capital. 2013-01-28T22:31:12Z 2013-01-28T22:31:12Z 2013-01 http://documents.worldbank.org/curated/en/2013/01/17172327/macroeconomic-shocks-banking-sector-developments-egypt-macroeconomic-shocks-banking-sector-developments-egypt http://hdl.handle.net/10986/12179 English en_US Policy Research Working Paper; No. 6314 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Middle East and North Africa Egypt, Arab Republic of |