Distress in European Banks: An Analysis Basedon a New Dataset
January 1, 2009
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Summary
The global financial crisis has highlighted the importance of early identification of weak banks: when problems are identified late, solutions are much more costly. Until recently, Europe has seen only a small number of outright bank failures, which made the estimation of early warning models for bank supervision very difficult. This paper presents a unique database of individual bank distress across the European Union from mid-1990s to 2008. Using this data set, we analyze the causes of banking distress in Europe. We identify a set of indicators and thresholds that can help to distinguish sound banks from those vulnerable to financial distress.
Subject: Bank soundness, Bank supervision, Banking, Distressed institutions, Early warning systems, Financial crises, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Loan loss provisions
Keywords: bank analyst, bank assets, bank distress, bank Pd, bank PDs, Bank soundness, Bank supervision, bank-year observation, baseline hazard, Distressed institutions, Early Intervention, Early Warning System, Early warning systems, EU bank, Europe, European Union, Global, Loan loss provisions, Regulation, WP
Pages:
39
Volume:
2009
DOI:
Issue:
009
Series:
Working Paper No. 2009/009
Stock No:
WPIEA2009009
ISBN:
9781451871562
ISSN:
1018-5941
