Key Charts - Size and Structure
Cooling Measures for Southeast Asia’s Hot Lending Market
- Commercial banks in Southeast Asia have increased lending dramatically in the past decade. Since 2007, loans have doubled in Malaysia and the Philippines and nearly tripled in Indonesia and Thailand.
- Normally, such a frenetic pace in loan growth can be cause for concern. But for most of these countries, economic growth is keeping pace: Commercial bank loans as a percentage of GDP have been fairly stable since 2007.
- Central banks are undertaking macro-prudential reforms in good times to protect against future crises. Bank Negara Malaysia has raised interest rates and reserve requirements for banks and discouraged leverage in the housing market, and it routinely conducts stress tests of the banking system to anticipate problems.
Sources: Datastream, Milken Institute.