Download The characteristics of the capital market

The Israel Business Conference
2009
The Banks and the Capital
Market—Credit Market
Challenges in Light of the
Crisis
1
Rony Hizkiyahu, the Supervisor of Banks
13 December 2009
The Banks and the Capital Market–
Credit Market Objectives in Light of the
Crisis
•
Characteristics of the banking system
•
Characteristics of the capital market
•
Weaknesses of the credit market during the crisis
•
Challenges
2
The characteristics of the banking
system
• Stable, conservative and concentrated
• Tight supervision, and stability-related limitations
• International standards––risk management, control,
corporate governance, capital (Basel 2)
• Capital adequacy––average 13.5 percent in September
2009
• High liquidity in line with excess liquidity in the economy
The characteristics of the capital market
• Wide range of investing entities
• Many issuers
• Gaps in regulation
• Dramatic increase in finance provided to the business
sector
• High liquidity in the banking system (available sources
for investments)
Main weaknesses in the capital market
during the crisis and its implications for
the financial system
Before the crisis
• Underpricing
• Structural problems following the reforms
During the crisis
• Steep decline in nonbank credit
• Lack of infrastructures for debt arrangements
• Loss of confidence in the markets (price volatility)
5
Challenges
• Adoption of appropriate criteria for risk management
• Dealing with pricing systems
• Creation of balance sheet mechanisms to ensure
conservative conduct/management
• Ensuring a variety of types of credit and the extent of credit
• Improving regulation
• Boosting the public's confidence in the capital market
6
thanks
7
Bank Credit vis-à-vis Nonbank Credit
450
12/2004-9/2009
NIS
billion 400
350
375
329
329
12.04
6.05
337
336
335
12.05
6.06
12.06
356
359
6.07
12.07
386
374
369
6.09
9.09
300
250
200
150
100
50
0
Bank credit to the business sector
6.08
12.08
Nonbank credit to the business sector
1.
Include institutional investors, credit card companies, nonresidents credit, government and households and financial companies.
Source: Information and Statistics Department.
Changes in Bank Credit vis-à-vis
Nonbank Credit
2005-9/2009
NIS
billion
60
40
20
0
6.05
12.05
6.06
12.06
6.07
12.07
6.08
12.08
6.09
9.09
-20
-40
-60
Bank credit to the business sector
Nonbank credit to the business sector
1.
Include institutional investors, credit card companies, nonresidents credit, government and households and financial companies.
Source: Information and Statistics Department.