Determinants of Ex-Ante Banking System Distress: A Macro-Micro Empirical Exploration of Some Recent Episodes
IMF Working Papers, March 1, 1999
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- Determinants of Ex-Ante Banking System Distress: A Macro-Micro Empirical Exploration of Some Recent Episodes
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Bibliographic details
- Authors: Brenda Gonzalez-Hermosillo
- Published: March 1, 1999
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451845167.001
Scope and episodes analyzed
- Empirical analysis of the contribution of microeconomic and macroeconomic factors to banking system problems in five episodes:
- U.S. Southwest (1986–92)
- U.S. Northeast (1991–92)
- California (1992–93)
- Mexico (1994–95)
- Colombia (1982–87)
- Author: Brenda Gonzalez-Hermosillo
- Date: March 1, 1999
- Series: IMF Working Papers, Working Paper No. 1999/033
Core findings
- A low capital equity and reserve coverage of problem loans ratio is identified as a leading indicator of bank distress, signaling a high likelihood of near-term failure.
- Distress is shown to be a function of the same fundamental macro-micro sources of risk that determine bank failures.
- Emphasizes that focusing on distress (rather than only on outright failures) allows assessment of the fragility of the banking system before a crisis actually occurs.
Key subjects and keywords
- Subjects: Banking; Commercial banks; Credit risk; Distressed institutions; Financial institutions; Financial regulation and supervision; Loans; Nonperforming loans
- Keywords: Asia and Pacific; bank distress; Banking crisis; Banking sector fragility; Commercial banks; coverage ratio; credit risk; Distressed institutions; equity capital; Global; hazard ratio; Loans; Nonperforming loans; performing loan; survival time; WP