Excessive anxiety on overseas lending
Other Names: Deterioration of confidence in loans to foreign countries
Nature: Transnational banks share an interest in reducing the anxiety about lending to developing countries that surfaces periodically among banking authorities in their home countries and among analysts of bank stock. Sometimes the anxiety is caused by inadequate knowledge of the economic and financial environment in borrowing countries. For a better understanding of the borrowers' situation, wider contacts and exchange of information may be required between home country banking authorities and developing countries. Multinational conferences among the interested parties as well as other forms of direct contact could be useful in this connection. If transnational banks were to become less constrained by their home banking authorities and stockholders, they could be asked to improve their loan maturities to reflect changes in the economic cycle. To accomplish this, banks could match the structure of their liabilities more closely to the structure of their assets.
Problem Type: F: Fuzzy exceptional problems
Date of last update 01.01.2000 – 00:00 CET