based on data from the japanese cabinet office, and ministry of internal affairs and communication. homar, t. and van wijbergen, s. ( 2013 ), “ on zombie banks and recessions after systemic banking crises : it does matter how governments intervene ”, university of amsterdam mimeo. bis central bankers ’ speeches it is however unclear whether bank capital constraints may be leading to quantitatively significant evergreening of loans or excessive risk taking. academic research has identified cases of small undercapitalised banks providing loans to risky firms after the collapse of lehman brothers, but these cases were isolated and the amounts involved were not quantitatively significant. 7 today, the ratio of non - performing loans continues to deteriorate in a number of jurisdictions, but it has remained stable at the aggregate level for large and complex banking groups. solvency positions have improved as a result of from both rising core tier 1 capital and reductions in risk - weighted assets. the median core tier 1 ratio of the euro area large and complex banking groups reached 11. 1 % in the first quarter of 2013, up from 9. 6 % at the end of 2011. 8 furthermore, the results of the ecb ’ s euro area bank lending survey, showing that euro area banks started tightening credit standards as early as the third quarter of 2007, may also be interpreted as going against the hypothesis of excessive risk taking. also, the evidence of the deleveraging of non - financial corporations during the financial crisis points against the hypothesis of the evergreening of loans. however, the observed large exposure of banks to sovereign debt may have longer - term effects on the non - financial sector of the economy. recent research suggests that banks with sizeable balance sheet exposures to stressed government debt at the beginning of the sovereign debt crisis have extended substantially less credit to non - financial corporations than otherwise similar non - exposed banks. 9 indeed, what is of concern at the moment is that a number of euro area banks seem to have intentionally sought to increase their holdings of government debt, at least in the early stages of the crisis. banks in countries under stress have, in particular, been investing in relatively risky government bonds, using cheap short - term funding, hoping to pocket the spread between the bond return and the cost of funding on the upside. 10 this phenomenon shares unsavoury features with the behaviour of banks during japan ’ s lost decade. in japan, bank portfolios were rebalanced away from lending to creditworthy firms because regulatory

ph economy : harnessing the bright spots date : may 19, 2022 occasion : adbi featured speaker webinar series speaker : bsp governor benjamin e. diokno good day, everyone. it is my pleasure to join you today and share updates on the philippine economy. the philippines is well into the recovery process. after the pandemic - driven recession in 2020, the economy grew by 5. 7 percent last year and sustained its robust momentum with an 8. 3 percent growth in the first quarter of 2022. growth in the first quarter was broad - based. on the supply side, all sectors expanded, driven by industry at 10. 4 percent, followed by services at 8. 6 percent. on the expenditure side, growth was driven by private consumption which grew by 10. 1 percent. gross capital formation expanded by 20. 0 percent. growth of government final consumption was subdued at 3. 6 percent. the employment picture is close to pre - pandemic level. from a peak of 17. 6 percent in april 2020, unemployment rate is down to just 5. 8 percent in march this year. moreover, foreign direct investments grew 54. 2 percent to all - time high last year. in the first two months of the year, fdis grew by 8. 0 percent to usd1. 7 billion. manufacturing activity has also rebounded, with the purchasing managers ’ index hitting 54. 3 in april, the highest in over four years. both business sentiment and consumer outlook have improved. our business expectation survey show broad improvements in outlook for the coming months. all these came on the back of a whole - of - government approach to recovery. in tandem with the national government ’ s efforts, the bangko sentral ng pilipinas rolled out its own list of covid - response measures. first, we cut our policy rate by a cumulative 200 basis points to a record low of two percent, which helped stimulate provision of credit to productive activities. we also reduced our reserve requirement against deposit and deposit substitute liabilities. for universal - commercial banks and non - bank financial institutions with quasi - banking functions ( nbqbs ), we reduced the reserve requirement from 14 percent to 12 percent effective 3 april 2020. for thrift banks and rural / cooperative banks, we reduced it from 4 percent to 3 percent effective 31 july 2020. second, we extended time - bound liquidity support to the national government and purchased government securities to help finance its pandemic -