Does country risk impact the banking sectors’ non-performing loans? Evidence from BRICS emerging economies

Financial Innovation

Table 2 Characteristics of the BRICS banking sector

Banking sector-specific ratios	% Average (2004–2017)
Banking sector-specific ratios	Brazil	Russia	India	China	South Africa	BRICS Region	Global (N = 214)
Bank capital to asset ratio	10.08	11.55	6.87	6.17	7.48	8.43	10.17
Bank liquid reserves to bank assets ratio	25.04	10.20	–	–	3.48	12.91	22.45
Bank non-performing loans to total gross loans ratio	3.34	6.11	4.65	3.68	3.33	4.22	6.32
Domestic credit to private sector by banks ratio (%GDP)	51.64	44.72	47.93	128.09	145.92	83.66	52.66
Five-bank asset concentration	72.94	41.33	41.82	68.03	99.13	64.65	80.01
Bank cost to income ratio	58.88	72.92	47.37	37.36	57.48	54.8	56.33
Bank regulatory capital to risk-weighted assets	17.49	15.10	13.02	10.77	14.21	14.12	17.13
Bank Z-score	15.71	7.33	16.36	18.66	13.64	14.34	13.70

Bank capital to asset ratio measured as the bank capital and reserves divided to total assets; Bank liquid reserves to bank assets ratio measured as the domestic currency holdings and deposits with the monetary authorities to claims on other governments, nonfinancial public enterprises, the private sector, and their banking institutions; Bank non-performing loans to total gross loans ratio measured as the value of nonperforming loans divided by the total value of the loan portfolio; Domestic credit to private sector by banks ratio refers to the financial resources provided to the private sector by other depository corporations; Five-bank asset concentration measured as the assets of five largest banks as a share of total commercial banking assets; Bank cost to income ratio measured as the operating expenses of a bank as a share of sum of net-interest revenue and other operating income; Bank regulatory capital to risk-weighted assets measured as the capital adequacy of deposit takers; Bank Z-score captures the probability of default of a country’s commercial banking system
Source: World Bank (Global financial development and World development indicators)