BIS Publications Focus on Climate Risk, Regtech, and Lending Issues
The Bank for International Settlements (BIS) published the Quarterly Review, which covers developments in global banking and financial markets and contains three special features that examine the non-bank lending in syndicated loan market, the growing role of global banks' foreign branches, and the post-pandemic prospects for global growth. The feature on lending offers an overview of global syndicated lending by non-banks and contrasts it with that by banks, before moving on to investigate the role of non-banks in cross-border spillovers during financial crises and the policy considerations around this issue. The feature notes that lending by non-banks is more across countries and industries and, in the wake of a crisis at home, non-banks curtail lending to foreign borrowers by more than they do to domestic ones, thus transmitting shocks across countries. BIS also released publications that discuss regulatory response to climate risks and topics related to technology and lending.
The key highlights of the aforementioned publications follow:
- The Financial Stability Institute (FSI) brief on regulatory response to climate risks highlights need for authorities to review their prudential frameworks with a view to taking full account of the implications of climate-related financial risks for financial stability. The paper suggests that standard Pillar 1 instruments might be suboptimal in addressing climate risks, instead the intrinsic flexibility of the Pillar 2 framework ensures that banks effectively manage such risks and have sufficient loss-absorbing capacity against them. The paper also notes that applying the current macro-prudential framework to contain systemic climate-related financial risks is likely to be ineffective and potentially counterproductive for financial stability.
- The BIS paper on the importance of information technology in banking and entrepreneurship builds a model of bank screening and lending, which predicts that in banking technology can spur entrepreneurship by making it easier for start-ups to borrow against collateral. Among other issues, the paper contributes to the recent literature that investigates how the rise of fintech affects credit-scoring and credit supply.
- The Irving Fisher Committee (IFC) paper on the use of big data in Asian central banks reveals that Asian central banks define big data in a more encompassing way that includes unstructured non-traditional as well as structured datasets. The interest in big data appears higher in Asia, including at the senior policy level while the focus is on projects developed to process natural language, conduct nowcasting/monitoring exercises, and develop applications to extract economy insights as well as suptech/regtech solutions. Asian central banks report dealing with big data to support a wide range of tasks, with big data posing challenges related to cyber-security and data strategy.
- Another paper from BIS estimates the conditional treatment effects of the European Investment Bank (EIB) lending to small and medium enterprises (SMEs) in Europe. The results show that positive effects of EIB-supported lending on job creation and investments were larger for smaller and younger firms. The benefits of EIB support appear to be linked to longer loan maturities. Moreover, better pricing conditions are associated with a stronger effect on employment and fixed assets growth, while no evidence was found that the effects vary depending on loan size.
- Press Release on BIS Quarterly Review
- BIS Quarterly Review (PDF)
- Regulatory Response to Climate Risks
- Paper on Technology in Banking and Entrepreneurship
- Paper on Use of Big Data in Asian Central Banks
- Paper on EIB Lending to SMEs
Keywords: International, Banking, Quarterly Review, Lending, Syndicated Loans, Credit Risk, Climate Change Risk, Basel, Big Data, Regtech, Suptech, SME, IFC, ESG, Loan Origination, Foreign Bank Branches, BIS, FSI
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous ArticleSRB and CNB Announce Decisions on Sberbank Resolution
CFPB Finalizes Rule on Small Business Lending Data Collection
The Consumer Financial Protection Bureau (CFPB) published a final rule that sets out data collection requirements on small business lending, under section 1071 of the Dodd-Frank Act.
BCBS to Consult on Pillar 3 Climate Risk Disclosures by End of 2023
The Bank for International Settlements (BIS) published a summary of the recent Basel Committee (BCBS) meetings.
FINMA Approves Merger of Credit Suisse and UBS
The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.
BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks
The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.
US Congress Report Examines Data Privacy and Cybersecurity Regulations
The U.S. Congressional Research Service published a report on banking, data privacy, and cybersecurity regulation.
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
EU to Conduct One-Off Scenario Analysis to Assess Transition Risk
The European authorities recently made multiple announcements that impact the banking sector.
APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.