A striking development following the crisis in the region's banking sector has been the pronounced shift away from interbank lending in favour of lending to the public and non-bank private sectors. A look at the maturity distribution of claims reveals that, in contrast to other major Asian borrowers, Korea and India experienced a rise in the proportion of short-term credit. India, on the other hand, has seen a general rise in borrowing from reporting banks over the same period, at both the short and the long end of the maturity spectrum. Therefore, European banks appear to be gaining a larger share of a shrinking pie. Over half of this rise is due to an increase in claims on Middle East oil producers, with the bulk of new funds being channelled to Saudi Arabia.
European banks continue to account for most of the credit supplied to the region.
However, US banks have increased their market share in the latest period. BIS reporting bank exposures to eastern Europe stabilised in the second half of 1999 after falling sharply in the year following the Russian debt moratorium. This decline was largely due to a drop in short-term lending, with a lengthening in maturity profile possibly reflecting debt restructuring. In contrast, a general lengthening in average maturities of Hungarian and Polish debt is a sign of increasing confidence in these economies. A sector breakdown of BIS reporting banks' exposures to the region indicates a decline in bank intermediation in favour of direct lending to the non-bank private sector.