Assessing Banking Sector Soundness in a Long-Term Framework: The Case of Venezuela
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Summary:
This paper combines financial soundness indicators (FSIs) and stress-testing methodologies to provide a broad assessment of the soundness of Venezuela's banking sector, based on a diagnosis of its structural and transient shortcomings. While the Venezuelan banking sector appears sound under current favorable economic conditions, it remains significantly vulnerable to cyclical downturns-which have been severe in the past. Banks are particularly exposed to interest rate and credit risks. This suggests that 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.
Series:
Working Paper No. 2006/225
Subject:
Banking Capital adequacy requirements Commercial banks Credit Nonperforming loans
Frequency:
Monthly
English
Publication Date:
October 18, 2006
ISBN/ISSN:
9781451864854/1018-5941
Stock No:
WPIEA2006225
Pages:
31
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