Chapter 8 - Sectoral and Industry Credit Risk and Control in Emerging Economies

Abstract

This chapter investigates, discusses, and assesses economic and financial performance implications of distribution and maturity profiles of risk assets in the lending portfolios of banks in emerging economies. It builds on three pertinent considerations—a bank's risk assets portfolio is made up of various categories of loans, differentiated on the bases of some banking considerations; there is no uniform method adopted by all banks for classifying risk assets for purposes of portfolio reporting and analysis; and depending on their peculiar circumstances, banks use some bases in choosing from the common approaches to classifying risk assets in their lending portfolios. However, sector-based classification is adopted to underscore the need to assess how specific industries in emerging economies fare in their countries of domicile. With emphasis on bank lending, the discussions underlie the significance of industries in facilitating the economic growth and development of emerging economies.