This paper examines estimations of the expected losses of loans and the provisioning techniques imposed by Czech regulatory norms. The current Czech regulatory quidelines define the criteria for loan classification and specify the minimum coefficients used for creating provisions. These...

The authors study the dependence of the Czech koruna’s exchange rate to the euro on risk factors that cannot be reduced to standard macroeconomic fundamentals. For this purpose, they construct an international asset-pricing model in which the exchange rate is codetermined by a risk factor...

We study the consequences of equity mispricing (a bubble) and the correction thereof (the bubble bursting) for real activity in a production economy. In our model, producers are financed by both bank debt and equity, and face a mix of systemic and idiosyncratic uncertainty. Positive/negative...