Loan Review, Provisioning, and Macroeconomic Linkages

December 1, 2000

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Loan Review, Provisioning, and Macroeconomic Linkages, (USA: International Monetary Fund, 2000) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Loan review is a process routinely used by banks to assess the current value of loan portfolios. Provisioning is a technique to translate loan review results into the balance sheet. It allows for ongoing valuation of loans. Both are core elements of credit risk management and important to prudential oversight. As illustrated in this paper, valuation feeds into indicators of overall bank soundness and key macroprudential indicators. Country practices and recent moves to more forward-looking models are surveyed. Macroeconomic linkages are highlighted, including tax treatment of provisions, variables of the monetary survey, and procyclical aspects of loan valuation systems.

Subject: Banking, Capital adequacy requirements, Credit, Financial institutions, Financial regulation and supervision, Loan classification, Loans, Money, Nonperforming loans

Keywords: Bank behavior, Bank supervisor, Capital adequacy requirements, Capital ratios, Credit, Cyclical bank behavior, Loan classification, Loan provisioning, Loan quality, Loan review, Loan takedown, Loan valuation, Loan value, Loans, Nonperforming loans, Restructured loan, West Africa, WP

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2000/195
Stock No:

WPIEA1952000
ISBN:

9781451859904
ISSN:

1018-5941

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