Dynamic Loan Loss Provisioning; Simulationson Effectiveness and Guide to Implementation

This simulation-based paper investigates the impact of different methods of dynamic provisioning on bank soundness and shows that this increasingly popular macroprudential tool can smooth provisioning costs over the credit cycle and lower banksâ€™ probability of default. In addition, the paper offers an in-depth guide to implementation that addresses pertinent issues related to data requirements, calibration and safeguards as well as accounting, disclosure and tax treatment. It also discusses the interaction of dynamic provisioning with other macroprudential instruments such as countercyclical capital.

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Year of publication:	2012-05-01
Institutions:	International Monetary Fund (IMF) ; International Monetary Fund
Subject:	Macroprudential Policy \| Latin America \| Bank soundness \| Banks \| Capital \| Credit risk \| capital adequacy \| capital adequacy ratio \| banking \| dividend payout \| banking system \| payout ratio \| probability of default \| banking sector \| capital requirement \| bank capital \| income statement \| bank solvency \| accounting standard \| bank managers \| banking regulation \| loan loss provision \| risk aversion \| equity capital \| bank profits \| tier 2 capital \| capital regulation \| credit expansion \| banking supervision \| tier 1 capital \| bank data \| mortgage lending \| capital markets \| monetary authority \| bank risk \| return on assets \| banking risks \| banking operations \| bank of spain \| bank risk-taking \| bank loan \| accounting treatment \| bank provisioning \| banking system fragility \| securities commissions \| bank size \| banking supervisors \| bank regulators \| capital increases \| banking systems \| bank capital regulation \| reserve requirement \| moral hazard \| bank performance \| macroeconomic stability \| banking crisis \| bank crisis \| bank lending \| bank policy \| international accounting standard \| central banking \| bank losses \| loan loss reserve \| banking market \| bank supervisors \| banking sectors \| minimum capital requirement \| prudential regulation \| capital standard \| capital standards \| bank systems \| bank for international settlements

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Extent:	application/pdf
Series:	IMF Working Papers.
Type of publication:	Book / Working Paper
Notes:	The text is part of a series IMF Working Papers Number 12/110 5 pages long
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011242397