Debt Overhang in Emerging Europe?
This paper assesses the extent to which debt overhang poses a constraint to economic activity in Emerging Europe, as the region emerges from the recent financial and economic crisis. At the macroeconomic level, it finds that the external imbalance...
| Main Authors: | , |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
|
| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111011085806 http://hdl.handle.net/10986/3606 |
| id |
okr-10986-3606 |
|---|---|
| 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 |
| topic |
ADVANCED ECONOMIES ASSET POSITION ASSET PRICES BALANCE SHEET BALANCE SHEETS BANK ASSETS BANK BALANCE SHEETS BANK BONDS BANK CREDIT BANK DEBT BANK FINANCING BANK LENDING BANK LOAN BANK LOANS BANK PROFITABILITY BANKING CRISES BANKING CRISIS BANKING SECTOR BANKING SYSTEM BIASES BOND BOND ISSUANCE BORROWING BUSINESS CYCLES CAPITAL BASE CENTRAL BANK COMMODITY PRICES COMMON CURRENCY AREA CONCEPT OF DEBT CONSUMER CREDIT CORPORATE DEBT CORPORATE FINANCE CORPORATE INVESTMENT CREDIT ACCESS CREDIT AVAILABILITY CREDIT CARD CREDIT CARD DEBT CREDIT CARDS CREDIT LINE CREDITOR CREDITOR RIGHTS CREDITORS CURRENCY DEPRECIATION CURRENCY MISMATCH CURRENCY SHORTAGES CURRENT ACCOUNT CURRENT ACCOUNT DEFICITS DEBT DEBT BURDEN DEBT CRISES DEBT CRISIS DEBT DEFAULT DEBT FINANCING DEBT FORGIVENESS DEBT LEVEL DEBT LEVELS DEBT LIABILITIES DEBT LIABILITY DEBT OVERHANG DEBT PAYMENTS DEBT PROBLEM DEBT RATIO DEBT RATIOS DEBT RELIEF DEBT RESCHEDULING DEBT RESOLUTION DEBT RESTRUCTURING DEBTOR DEBTORS DEBTS DEFAULTS DEPOSIT DEPOSIT MONEY BANKS DEVELOPING COUNTRIES DEVELOPING COUNTRY DISTRIBUTION OF CREDIT DOMESTIC BANKING DOMESTIC BANKS DOMESTIC CREDIT DOMESTIC CURRENCY DOMESTIC MARKET DUMMY VARIABLE EARNINGS ECONOMIC ACTIVITY ECONOMIC CRISIS ECONOMIC GROWTH ECONOMIC POLICIES ECONOMIC POLICY EDUCATION LEVEL EMERGING ECONOMIES EMERGING MARKET EMERGING MARKET ECONOMIES EMERGING MARKETS ENTERPRISE CREDIT ENTERPRISE PERFORMANCE EQUITY CLAIM EQUITY FINANCING EQUITY FUNDING EQUITY RETURN EQUITY RETURNS EQUITY SHARE EXCHANGE RATE EXCHANGE RATES EXISTING CREDITORS EXISTING DEBT EXPORTER EXTERNAL DEBT EXTERNAL DEBTS EXTERNAL FINANCE EXTERNAL FUNDING FACE VALUE FAMILY BUSINESS FINANCIAL ASSETS FINANCIAL ASSISTANCE FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL HEALTH FINANCIAL LIABILITIES FINANCIAL MARKETS FINANCIAL PORTFOLIOS FINANCIAL STABILITY FINANCIAL STATEMENT FIRM PERFORMANCE FOREIGN BANKS FOREIGN CURRENCY FOREIGN CURRENCY LOAN FOREIGN CURRENCY LOANS FOREIGN DEBT FOREIGN EQUITY FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES FOREIGN INVESTORS GOVERNMENT DEBT GUARANTOR HIGH DEBT HOME IMPROVEMENT HOME MARKETS HOUSEHOLD DEBT HOUSEHOLD INCOME INCOME LEVEL INCOME SHOCKS INDEBTED INDEBTED HOUSEHOLDS INDEBTEDNESS INDIVIDUAL BANKS INDIVIDUAL CREDITORS INFORMATION ASYMMETRIES INSURANCE INTEREST RATE INTEREST RATE DIFFERENTIALS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKS INTERNATIONAL BOND INTERNATIONAL DEBT INTERNATIONAL DEBT SECURITIES INTERNATIONAL FINANCIAL INSTITUTIONS INVESTMENT ACTIVITY INVESTMENT BEHAVIOR INVESTMENT DECISIONS INVESTMENT LOAN INVESTMENT OPPORTUNITIES ISSUANCE LENDERS LENDING DECISIONS LEVEL OF DEBT LEVELS OF CREDIT LEVERAGE LIABILITY LIQUIDITY LIVING STANDARDS LOAN LOAN LOSSES LOAN PORTFOLIOS LOAN QUALITY LOANS FROM BANKS LOCAL CURRENCY LOCAL DEBT LONG-TERM COST LONG-TERM COSTS LOWER DEBT MATURITIES MONETARY FUND MORAL HAZARD MORTGAGE MORTGAGE CREDIT MORTGAGE DEBT MORTGAGE LOANS MORTGAGES MULTINATIONAL NEGATIVE SHOCK NEGATIVE SHOCKS NET DEBT NON-PERFORMING LOAN NON-PERFORMING LOANS NPL OUTPUT LOSSES OUTSTANDING STOCK OVERDRAFT OVERDRAFT FACILITY PAYOFF PENALTY PENSION POLICY RESPONSE PRIVATE CREDIT PRIVATE SAVING PRIVATE SECTOR CREDIT PRIVATE SECTOR LOANS PROPERTY RIGHTS PUBLIC DEBT PUBLIC DEBTS PUBLIC FUNDS REAL EXCHANGE RATE REMITTANCE REMITTANCES RENEGOTIATION REPAYMENT REPAYMENT DISCIPLINE REPAYMENTS RESERVE SAVINGS SELF-EMPLOYMENT SHARE OF ASSETS SHAREHOLDERS SOVEREIGN DEBT SOVEREIGN DEBTS STOCKS TAX TRADE BALANCE TRANSPARENCY URBAN AREA USE OF BANK CREDIT VALUE OF DEBT VULNERABLE HOUSEHOLDS WHOLESALE BANK |
| spellingShingle |
ADVANCED ECONOMIES ASSET POSITION ASSET PRICES BALANCE SHEET BALANCE SHEETS BANK ASSETS BANK BALANCE SHEETS BANK BONDS BANK CREDIT BANK DEBT BANK FINANCING BANK LENDING BANK LOAN BANK LOANS BANK PROFITABILITY BANKING CRISES BANKING CRISIS BANKING SECTOR BANKING SYSTEM BIASES BOND BOND ISSUANCE BORROWING BUSINESS CYCLES CAPITAL BASE CENTRAL BANK COMMODITY PRICES COMMON CURRENCY AREA CONCEPT OF DEBT CONSUMER CREDIT CORPORATE DEBT CORPORATE FINANCE CORPORATE INVESTMENT CREDIT ACCESS CREDIT AVAILABILITY CREDIT CARD CREDIT CARD DEBT CREDIT CARDS CREDIT LINE CREDITOR CREDITOR RIGHTS CREDITORS CURRENCY DEPRECIATION CURRENCY MISMATCH CURRENCY SHORTAGES CURRENT ACCOUNT CURRENT ACCOUNT DEFICITS DEBT DEBT BURDEN DEBT CRISES DEBT CRISIS DEBT DEFAULT DEBT FINANCING DEBT FORGIVENESS DEBT LEVEL DEBT LEVELS DEBT LIABILITIES DEBT LIABILITY DEBT OVERHANG DEBT PAYMENTS DEBT PROBLEM DEBT RATIO DEBT RATIOS DEBT RELIEF DEBT RESCHEDULING DEBT RESOLUTION DEBT RESTRUCTURING DEBTOR DEBTORS DEBTS DEFAULTS DEPOSIT DEPOSIT MONEY BANKS DEVELOPING COUNTRIES DEVELOPING COUNTRY DISTRIBUTION OF CREDIT DOMESTIC BANKING DOMESTIC BANKS DOMESTIC CREDIT DOMESTIC CURRENCY DOMESTIC MARKET DUMMY VARIABLE EARNINGS ECONOMIC ACTIVITY ECONOMIC CRISIS ECONOMIC GROWTH ECONOMIC POLICIES ECONOMIC POLICY EDUCATION LEVEL EMERGING ECONOMIES EMERGING MARKET EMERGING MARKET ECONOMIES EMERGING MARKETS ENTERPRISE CREDIT ENTERPRISE PERFORMANCE EQUITY CLAIM EQUITY FINANCING EQUITY FUNDING EQUITY RETURN EQUITY RETURNS EQUITY SHARE EXCHANGE RATE EXCHANGE RATES EXISTING CREDITORS EXISTING DEBT EXPORTER EXTERNAL DEBT EXTERNAL DEBTS EXTERNAL FINANCE EXTERNAL FUNDING FACE VALUE FAMILY BUSINESS FINANCIAL ASSETS FINANCIAL ASSISTANCE FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL HEALTH FINANCIAL LIABILITIES FINANCIAL MARKETS FINANCIAL PORTFOLIOS FINANCIAL STABILITY FINANCIAL STATEMENT FIRM PERFORMANCE FOREIGN BANKS FOREIGN CURRENCY FOREIGN CURRENCY LOAN FOREIGN CURRENCY LOANS FOREIGN DEBT FOREIGN EQUITY FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES FOREIGN INVESTORS GOVERNMENT DEBT GUARANTOR HIGH DEBT HOME IMPROVEMENT HOME MARKETS HOUSEHOLD DEBT HOUSEHOLD INCOME INCOME LEVEL INCOME SHOCKS INDEBTED INDEBTED HOUSEHOLDS INDEBTEDNESS INDIVIDUAL BANKS INDIVIDUAL CREDITORS INFORMATION ASYMMETRIES INSURANCE INTEREST RATE INTEREST RATE DIFFERENTIALS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKS INTERNATIONAL BOND INTERNATIONAL DEBT INTERNATIONAL DEBT SECURITIES INTERNATIONAL FINANCIAL INSTITUTIONS INVESTMENT ACTIVITY INVESTMENT BEHAVIOR INVESTMENT DECISIONS INVESTMENT LOAN INVESTMENT OPPORTUNITIES ISSUANCE LENDERS LENDING DECISIONS LEVEL OF DEBT LEVELS OF CREDIT LEVERAGE LIABILITY LIQUIDITY LIVING STANDARDS LOAN LOAN LOSSES LOAN PORTFOLIOS LOAN QUALITY LOANS FROM BANKS LOCAL CURRENCY LOCAL DEBT LONG-TERM COST LONG-TERM COSTS LOWER DEBT MATURITIES MONETARY FUND MORAL HAZARD MORTGAGE MORTGAGE CREDIT MORTGAGE DEBT MORTGAGE LOANS MORTGAGES MULTINATIONAL NEGATIVE SHOCK NEGATIVE SHOCKS NET DEBT NON-PERFORMING LOAN NON-PERFORMING LOANS NPL OUTPUT LOSSES OUTSTANDING STOCK OVERDRAFT OVERDRAFT FACILITY PAYOFF PENALTY PENSION POLICY RESPONSE PRIVATE CREDIT PRIVATE SAVING PRIVATE SECTOR CREDIT PRIVATE SECTOR LOANS PROPERTY RIGHTS PUBLIC DEBT PUBLIC DEBTS PUBLIC FUNDS REAL EXCHANGE RATE REMITTANCE REMITTANCES RENEGOTIATION REPAYMENT REPAYMENT DISCIPLINE REPAYMENTS RESERVE SAVINGS SELF-EMPLOYMENT SHARE OF ASSETS SHAREHOLDERS SOVEREIGN DEBT SOVEREIGN DEBTS STOCKS TAX TRADE BALANCE TRANSPARENCY URBAN AREA USE OF BANK CREDIT VALUE OF DEBT VULNERABLE HOUSEHOLDS WHOLESALE BANK Brown, Martin Lane, Philip R. Debt Overhang in Emerging Europe? |
| geographic_facet |
Europe and Central Asia Europe and Central Asia |
| relation |
Policy Research working paper ; no. WPS 5784 |
| description |
This paper assesses the extent to which
debt overhang poses a constraint to economic activity in
Emerging Europe, as the region emerges from the recent
financial and economic crisis. At the macroeconomic level,
it finds that the external imbalance problem for Emerging
Europe has been in most cases more one of flows (high
current account deficits in the pre-crisis years) rather
than large stocks of external debt. A high reliance on
equity funding means that net external debt is far lower
than net external liabilities. Domestic balance sheets have
expanded quite rapidly but sector liabilities remain
relatively low compared with advanced economies. With the
important exception of Hungary, public debt levels also
remain relatively low in Emerging Europe. At the
microeconomic level, the potential for debt overhang in the
corporate sector is limited to a few countries: Latvia,
Lithuania, Estonia, and Slovenia. Due to the low incidence
of household debt, hardly any country, except Estonia, seems
to face a threat of debt overhang in the household sector.
The strong increase in non-performing loans compared with
pre-crisis bank profitability suggests that debt overhang in
the banking sector is a threat in Ukraine, Latvia,
Lithuania, Hungary, Georgia, and Albania. Financial
integration of Emerging Europe seems to have contributed to
the transmission of the crisis to the region. At the same
time, this integration is helping the region in managing the
crisis by concerted actions of the major players. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Brown, Martin Lane, Philip R. |
| author_facet |
Brown, Martin Lane, Philip R. |
| author_sort |
Brown, Martin |
| title |
Debt Overhang in Emerging Europe? |
| title_short |
Debt Overhang in Emerging Europe? |
| title_full |
Debt Overhang in Emerging Europe? |
| title_fullStr |
Debt Overhang in Emerging Europe? |
| title_full_unstemmed |
Debt Overhang in Emerging Europe? |
| title_sort |
debt overhang in emerging europe? |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111011085806 http://hdl.handle.net/10986/3606 |
| _version_ |
1764387414007087104 |
| spelling |
okr-10986-36062021-04-23T14:02:11Z Debt Overhang in Emerging Europe? Brown, Martin Lane, Philip R. ADVANCED ECONOMIES ASSET POSITION ASSET PRICES BALANCE SHEET BALANCE SHEETS BANK ASSETS BANK BALANCE SHEETS BANK BONDS BANK CREDIT BANK DEBT BANK FINANCING BANK LENDING BANK LOAN BANK LOANS BANK PROFITABILITY BANKING CRISES BANKING CRISIS BANKING SECTOR BANKING SYSTEM BIASES BOND BOND ISSUANCE BORROWING BUSINESS CYCLES CAPITAL BASE CENTRAL BANK COMMODITY PRICES COMMON CURRENCY AREA CONCEPT OF DEBT CONSUMER CREDIT CORPORATE DEBT CORPORATE FINANCE CORPORATE INVESTMENT CREDIT ACCESS CREDIT AVAILABILITY CREDIT CARD CREDIT CARD DEBT CREDIT CARDS CREDIT LINE CREDITOR CREDITOR RIGHTS CREDITORS CURRENCY DEPRECIATION CURRENCY MISMATCH CURRENCY SHORTAGES CURRENT ACCOUNT CURRENT ACCOUNT DEFICITS DEBT DEBT BURDEN DEBT CRISES DEBT CRISIS DEBT DEFAULT DEBT FINANCING DEBT FORGIVENESS DEBT LEVEL DEBT LEVELS DEBT LIABILITIES DEBT LIABILITY DEBT OVERHANG DEBT PAYMENTS DEBT PROBLEM DEBT RATIO DEBT RATIOS DEBT RELIEF DEBT RESCHEDULING DEBT RESOLUTION DEBT RESTRUCTURING DEBTOR DEBTORS DEBTS DEFAULTS DEPOSIT DEPOSIT MONEY BANKS DEVELOPING COUNTRIES DEVELOPING COUNTRY DISTRIBUTION OF CREDIT DOMESTIC BANKING DOMESTIC BANKS DOMESTIC CREDIT DOMESTIC CURRENCY DOMESTIC MARKET DUMMY VARIABLE EARNINGS ECONOMIC ACTIVITY ECONOMIC CRISIS ECONOMIC GROWTH ECONOMIC POLICIES ECONOMIC POLICY EDUCATION LEVEL EMERGING ECONOMIES EMERGING MARKET EMERGING MARKET ECONOMIES EMERGING MARKETS ENTERPRISE CREDIT ENTERPRISE PERFORMANCE EQUITY CLAIM EQUITY FINANCING EQUITY FUNDING EQUITY RETURN EQUITY RETURNS EQUITY SHARE EXCHANGE RATE EXCHANGE RATES EXISTING CREDITORS EXISTING DEBT EXPORTER EXTERNAL DEBT EXTERNAL DEBTS EXTERNAL FINANCE EXTERNAL FUNDING FACE VALUE FAMILY BUSINESS FINANCIAL ASSETS FINANCIAL ASSISTANCE FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL HEALTH FINANCIAL LIABILITIES FINANCIAL MARKETS FINANCIAL PORTFOLIOS FINANCIAL STABILITY FINANCIAL STATEMENT FIRM PERFORMANCE FOREIGN BANKS FOREIGN CURRENCY FOREIGN CURRENCY LOAN FOREIGN CURRENCY LOANS FOREIGN DEBT FOREIGN EQUITY FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES FOREIGN INVESTORS GOVERNMENT DEBT GUARANTOR HIGH DEBT HOME IMPROVEMENT HOME MARKETS HOUSEHOLD DEBT HOUSEHOLD INCOME INCOME LEVEL INCOME SHOCKS INDEBTED INDEBTED HOUSEHOLDS INDEBTEDNESS INDIVIDUAL BANKS INDIVIDUAL CREDITORS INFORMATION ASYMMETRIES INSURANCE INTEREST RATE INTEREST RATE DIFFERENTIALS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKS INTERNATIONAL BOND INTERNATIONAL DEBT INTERNATIONAL DEBT SECURITIES INTERNATIONAL FINANCIAL INSTITUTIONS INVESTMENT ACTIVITY INVESTMENT BEHAVIOR INVESTMENT DECISIONS INVESTMENT LOAN INVESTMENT OPPORTUNITIES ISSUANCE LENDERS LENDING DECISIONS LEVEL OF DEBT LEVELS OF CREDIT LEVERAGE LIABILITY LIQUIDITY LIVING STANDARDS LOAN LOAN LOSSES LOAN PORTFOLIOS LOAN QUALITY LOANS FROM BANKS LOCAL CURRENCY LOCAL DEBT LONG-TERM COST LONG-TERM COSTS LOWER DEBT MATURITIES MONETARY FUND MORAL HAZARD MORTGAGE MORTGAGE CREDIT MORTGAGE DEBT MORTGAGE LOANS MORTGAGES MULTINATIONAL NEGATIVE SHOCK NEGATIVE SHOCKS NET DEBT NON-PERFORMING LOAN NON-PERFORMING LOANS NPL OUTPUT LOSSES OUTSTANDING STOCK OVERDRAFT OVERDRAFT FACILITY PAYOFF PENALTY PENSION POLICY RESPONSE PRIVATE CREDIT PRIVATE SAVING PRIVATE SECTOR CREDIT PRIVATE SECTOR LOANS PROPERTY RIGHTS PUBLIC DEBT PUBLIC DEBTS PUBLIC FUNDS REAL EXCHANGE RATE REMITTANCE REMITTANCES RENEGOTIATION REPAYMENT REPAYMENT DISCIPLINE REPAYMENTS RESERVE SAVINGS SELF-EMPLOYMENT SHARE OF ASSETS SHAREHOLDERS SOVEREIGN DEBT SOVEREIGN DEBTS STOCKS TAX TRADE BALANCE TRANSPARENCY URBAN AREA USE OF BANK CREDIT VALUE OF DEBT VULNERABLE HOUSEHOLDS WHOLESALE BANK This paper assesses the extent to which debt overhang poses a constraint to economic activity in Emerging Europe, as the region emerges from the recent financial and economic crisis. At the macroeconomic level, it finds that the external imbalance problem for Emerging Europe has been in most cases more one of flows (high current account deficits in the pre-crisis years) rather than large stocks of external debt. A high reliance on equity funding means that net external debt is far lower than net external liabilities. Domestic balance sheets have expanded quite rapidly but sector liabilities remain relatively low compared with advanced economies. With the important exception of Hungary, public debt levels also remain relatively low in Emerging Europe. At the microeconomic level, the potential for debt overhang in the corporate sector is limited to a few countries: Latvia, Lithuania, Estonia, and Slovenia. Due to the low incidence of household debt, hardly any country, except Estonia, seems to face a threat of debt overhang in the household sector. The strong increase in non-performing loans compared with pre-crisis bank profitability suggests that debt overhang in the banking sector is a threat in Ukraine, Latvia, Lithuania, Hungary, Georgia, and Albania. Financial integration of Emerging Europe seems to have contributed to the transmission of the crisis to the region. At the same time, this integration is helping the region in managing the crisis by concerted actions of the major players. 2012-03-19T18:05:26Z 2012-03-19T18:05:26Z 2011-08-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111011085806 http://hdl.handle.net/10986/3606 English Policy Research working paper ; no. WPS 5784 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper Europe and Central Asia Europe and Central Asia |