Assessing Banking Sector Soundness in a Long-Term Framework: The Case of Venezuela
IMF Working Papers, October 18, 2006
Source details
- Canonical URL
- Assessing Banking Sector Soundness in a Long-Term Framework: The Case of Venezuela
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Bibliographic details
- Authors: Rodolphe Blavy
- Published: October 18, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451864854.001
Summary and Purpose
- Combines financial soundness indicators (FSIs) and stress-testing methodologies to provide a broad assessment of the soundness of Venezuela's banking sector.
- Assessment is based on a diagnosis of the sector's structural and transient shortcomings.
Key Findings
- Under current favorable economic conditions, the Venezuelan banking sector appears sound.
- The sector remains significantly vulnerable to cyclical downturns—which have been severe in the past.
- Banks are particularly exposed to interest rate and credit risks.
- The strong FSIs may be partly the result of a conjunctural credit boom in the context of capital controls and very low real interest rates.
Methodology
- Uses a combination of:
- Financial soundness indicators (FSIs).
- Stress-testing methodologies.
- Focuses on both structural shortcomings and transient (cyclical) vulnerabilities.
Subject Areas and Keywords
- Subject: Banking, Capital adequacy requirements, Commercial banks, Credit, Nonperforming loans
- Keywords: a number of bank, bank behavior, bank legislation, bank regulation, banking sector indicator, central bank, WP