Washington, D.C., October 30, 2014 - Bank lending conditions in emerging economies tightened again in 2014Q3 after easing in 2014Q2, according to the latest Emerging Markets Bank Lending Conditions Survey from the Institute of International Finance.
"We have seen a turn back towards tighter lending conditions in emerging markets in Q3 as loan demand has weakened and non-performing loans rose," said Charles Collyns, chief economist at the IIF. "More volatile financial markets have also reversed some of the improvement in bank funding earlier in the year."
The composite index of the IIF's Survey decreased 0.6 points to 49.6 in 2014Q3. A value below 50 implies a tightening in emerging market bank lending conditions relative to 2014Q2.
Domestic funding conditions eased further while improvement in international funding conditions reversed in 2014Q3, possibly due to greater risk aversion towards EM assets during the quarter, a development also observed in the IIF's monthly Portfolio Tracker.
The supply of trade finance slowed even as the demand for trade finance continued to tick up. Meanwhile, tightening in bank credit standards moderated.
By region, lending conditions in Emerging Europe eased at a much slower pace than in Q2 and they continued to tighten in Latin America and Emerging Asia. Bank lending conditions continued to improve in MENA and Sub-Saharan Africa.
For more information on the Survey, visit http://www.iif.com/emr/global/emls/.
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The Institute of International Finance is the global association of the financial industry, with close to 500 members from 70 countries. Its mission is to support the financial industry in the prudent management of risks; to develop sound industry practices; and to advocate for regulatory, financial and economic policies that are in the broad interests of its members and foster global financial stability and sustainable economic growth. Within its membership IIF counts commercial and investment banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks and development banks. For more information visit www.iif.com.