The Impact of 2008 Financial Crisis on the Banking Sector of BRICS Countries

The 2008 financial crisis have largely damaged global banking sector. BRICS economies are playing a rapidly increasingly role in the global financial market and world economy. Many scholars advocate that BRICS banks tended to be posed more negative effects from the recent crisis. This thesis verifies the facticity of this assumption and examines the impacts of 2008 global financial crisis on BRICS countries’ banking sector by studying on bank-level data collected from Bankscope banking information database. Three key banking channels of potential crisis spillovers are taken into account: slumps in bank lending activities, increasing exposures to liquid risks and drops in bank asset quality, namely, increases in non-performed loan growth triggered by the recessions of real economy. The results suggest that BRICS banks’ lending activities were harmed more but they suffered less liquid risks and expansion in NPL ratio in comparison to the banks from other emerging countries. These impacts were mostly led by the depression in real economy and capitalization in BRICS banking sector. Moreover, BRICS banks have a stronger and earlier rebound differentiating from other emerging markets.