Mongolia is one of the brightest hopes among the world’s frontier markets: a fast-growing economy with a vibrant democracy and a young population. So it’s salutary to be reminded that not all is necessarily well.

On Thursday, Moody’s Investors Service published its first report on the country’s banking sector, giving it a negative outlook. The reason, writes Hyun Hee Park, Moody’s analyst in Hong Kong, is “rapid loan growth in an economy that is increasingly exposed to commodity-driven boom-bust cycles,” exacerbated by “high loan concentrations, weak risk-monitoring systems, and the developing nature of the regulatory framework.” Ouch. Continue reading »