In many countries, loan-classification rules are so adaptable that banks can make bad loans look good simply by lending more to their distressed borrowers, a process known as evergreening.
In many countries loans in 1997 exceeded deposits by 20%, says Mr van Steenis, with the gap made up by wholesale funding, often from abroad.
Financing is hard to come by (in many countries loans are granted for as little as 20 months); entrepreneurs find it easier to get several small loans for each business rather than a large chunk of money.But the most crucial factor may be bureaucracy.
Dr. Kim's lack of financial expertise and government experience are damning only if he is forced to lead an institution largely devoted to providing the country-by-country loans and grants that fewer and fewer governments need.
That will very likely happen directly, through country-to-country loans, and indirectly, through the euro zone's rescue fund — the European Financial Stability Facility, to which most members of the euro currency union contribute.
Q. Are banks overextended in any particular area of the economy? A. There is no obvious severe loan area that would correspond to the energy, farm, real estate and developing-country loans of the 1980's.
Not every wealthy country uses loan securitization to finance housing; some countries in Europe use so-called covered bonds, debt securities that remain on the issuer's balance sheet.
In many countries where loans are only now becoming available to consumers, data on consumer spending on utilities could prove invaluable in determining loan eligibility.
These countries give loans, not grants, to Morocco.
Other European countries offered loans to support the government, but with few details.
It has bailed out troubled countries through loans, but only on strict conditions.
