EM banks: revisiting the risks

India’s banks entered the crisis in worse shape than other major EMs, although large state involvement in the financial sector means the government is unlikely to remain idle if loan losses start to mount. Elsewhere, we have concerns in Brazil, Mexico, and South Africa due to limited fiscal capacity to help struggling banks. Meanwhile, problems on the liabilities side of banks’ balance sheets are most severe in Turkey, where large short-term external debts look increasingly difficult to roll over.