Do Dynamic Provisions Enhance Bank Solvency and Reduce Credit Procyclicality? a Study of the Chilean Banking System
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Summary:
Dynamic provisions could help to enhance the solvency of individual banks and reduce procyclicality. Accomplishing these objectives depends on country-specific features of the banking system, business practices, and the calibration of the dynamic provisions scheme. In the case of Chile, a simulation analysis suggests Spanish dynamic provisions would improve banks' resilience to adverse shocks but would not reduce procyclicality. To address the latter, other countercyclical measures should be considered.
Series:
Working Paper No. 2012/124
Subject:
Bank solvency Banking Credit Domestic credit Financial institutions Financial sector policy and analysis Loans Money Procyclicality
English
Publication Date:
May 1, 2012
ISBN/ISSN:
9781475503531/1018-5941
Stock No:
WPIEA2012124
Pages:
21
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