Heiko Hesse

Heiko HesseHeiko Hesse is an economist in the Monetary and Capital Markets Department at the International Monetary Fund (IMF) after having worked in the Middle East Department and on the IMF’s Global Financial Stability Report. Prior to that, he was an economist at the World Bank from 2006-2007 on the Commission on Growth and Development, which brought together 21 leading practitioners from government, business, and the policymaking arenas and was chaired by Nobel Laureate Michael Spence. Before that in 2005–2006, he was a visiting scholar at Yale University and a consultant at the World Bank. He also worked at McKinsey in their Financial Institutions Practice, NERA Economic Consulting as well as PwC. Some of his recent research involved systemic risk, sovereign wealth funds, spillovers to EM countries as well as Islamic finance. He has published in a number of refereed academic journals (e.g. Journal of Development Economics) and is a frequent speaker at central banks and conferences. Heiko obtained his PhD in Economics from Nuffield College, University of Oxford and his BSc in Financial Economics from the University of Essex. A native of Germany and Thailand, he is a former professional football player for Borussia Dortmund as well as one of the main actors in the German movie documentary ‘Die Champions’ (2003) and the sequel ‘HalbZeit’ (2010) by Adolf-Grimme-Prize Winner Christoph Hübner. In Washington DC, he is engaged in international and transatlantic issues as the President of the Washington European Society, a non-profit.

Papers Published in World Economics:

Further Fallout from the Global Financial Crisis

We examine the recent credit slowdown in emerging markets from three analytical angles. First, we find that, similar to past history, a credit boom preceded the current slowdown in many emerging markets, and argue that, going forward, a protracted period of sluggish growth is likely. Second, we focus on a relatively understudied region – the Middle East and North Africa (MENA) – using a more detailed banking data. We uncover a key role played by bank funding, in particular, deposit growth and external borrowing slowed considerably, despite expansionary monetary policy. Finally, we show that bank-level fundamentals – capitalisation and loan quality – helped to explain differences in credit growth across banks and countries.

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Trends and Challenges in Islamic Finance

The paper first discusses the current trends in Islamic finance, which has become mainstream with currently more than US$800 billion of assets worldwide and a buoyant market for sukuk bonds. However, this exorbitant growth raises many challenges, particularly in the areas of banking, capital markets and regulation. Thus, the paper then considers these challenges, notably the economic and legal bottlenecks of sukuk, banking-specific issues, such as liquidity risk management and business models, as well as disharmonized financial regulation. Despite the challenges, the paper concludes that the Islamic finance industry has a bright future.

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