The world's largest emerging markets recovered quickly from the 2008 financial crisis because consumers and companies went on a borrowing binge. Now, as those economies cool, bad loans are haunting banks from Turkey to South Africa. India is injecting money into state-run lenders facing a huge rise in soured debt, and Chinese banks have been told to increase provisions against lending losses. "Credit growth in emerging markets has been phenomenal since 2008," says Satyajit Das, author of a half-dozen books on financial risk. He blames near-zero-percent interest rates in the U.S. and other developed nations, which have kept borrowing costs artificially low. "Many borrowers will struggle to repay the debt," he says. "We're ripe for a new emerging-market crisis."
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