High-Level Summary Technical Assistance Reports

Barbados: Stress testing

By Petr Jakubik, Adam Gersl

April 4, 2025

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Petr Jakubik, and Adam Gersl. "Barbados: Stress testing", High-Level Summary Technical Assistance Reports 2025, 012 (2025), accessed May 20, 2025, https://doi.org/10.5089/9798229007078.029

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Summary

The technical assistance mission developed a multi-factor, multi-period solvency stress testing framework for banks supervised by the Central Bank of Barbados (CBB) and credit unions supervised by the Financial Services Commission (FSC). This framework is built around explicit macroeconomic scenarios and credit risk satellite models for non-performing loans (NPLs), estimated separately for each type of institution. The calibrated macroeconomic scenarios are integrated into the NPL satellite models to project NPLs and, ultimately, credit losses. The developed tools provide scenario-specific, macroeconomically consistent projections of institutions’ key balance sheet, profit and loss, and capital adequacy items over a period of up to three years.

Subject: Credit bureaus, Financial institutions, Financial markets, Financial sector policy and analysis, Financial sector stability, Financial statements, Nonperforming loans, Public financial management (PFM), Stress testing

Keywords: Balance sheet approach, Banks, Capital markets department, Credit bureaus, Credit unions, Financial sector stability, Financial stability, Financial statements, FSC stress, Nonperforming loans, Stress test result, Stress test tool, Stress testing, Systemic risk

Publication Details

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