The Bahamas: Financial Sector Stability Assessment

IMF Staff Country Reports, April 11, 2013

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The Bahamas: Financial Sector Stability Assessment

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Bibliographic details

• Published: April 11, 2013
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781484357675.002

Overview and context

• Article provides an overview of the structure of the Bahamian financial system following the financial crisis in the United States.
• After the U.S. crisis, the Bahamian financial structure showed fragile growth.
• Tourism, the main source of income for the domestic economy, weakened owing to the U.S. crisis.
• The increase in oil prices was the key reason for the destroyed infrastructure.
• Amidst these vulnerabilities, the banking sector showed stability with high capital and liquidity and sustained challenges; the insurance sector also showed significant improvement.
• The current financial framework needs to be strengthened, and the mission recommends several reforms to handle financial shocks.

Key findings

• Fragile growth in the Bahamian financial structure following the U.S. financial crisis.
• Tourism—a principal income source—was weakened by spillovers from the U.S. crisis.
• Increase in oil prices contributed materially to destroyed infrastructure.
• Banking sector showed stability characterized by:
  • High capital
  • High liquidity
  • Sustained challenges (unspecified in the summary)
• Insurance sector showed significant improvement.
• The overall financial framework is assessed as needing strengthening to better handle financial shocks.

Vulnerabilities and risks

• Dependence on tourism exposes the domestic economy and financial system to external shocks originating in the United States.
• Infrastructure damage linked to higher oil prices represents an economic and financial vulnerability.
• Persistent, unspecified challenges in the banking sector despite strong capital and liquidity positions.

Policy recommendations (as summarized)

• Strengthen the current financial framework to improve resilience to financial shocks.
• Implement the mission’s recommended reforms (specific reforms not detailed in the summary).

Subjects and keywords (as provided)

• Subjects: Banking, Commercial banks, Financial crises, Financial institutions, Financial regulation and supervision, Insurance companies, Nonperforming loans
• Keywords: Bahamas liquidation update, bank lending, capital base, Caribbean, CBoB authority, CBoB supervision, CLICO Bahamas liquidation update, Commercial banks, CR, excess reserves, financial system, Global, Insurance companies, interest rate, ISCR, liquidity position, Nonperforming loans, offshore bank, onshore bank, parent company, price index, securities Commission of The Bahamas, U.S. dollar

Source: The Bahamas: Financial Sector Stability Assessment, April 11, 2013 (IMF Staff Country Reports).

Content in this bundle

• The Bahamas: Financial Sector Stability Assessment; IMF Country Report 13/101; January 18, 2013
  • The Bahamas: Financial Sector Stability Assessment; IMF Country Report 13/101; January 18, 2013 (Markdown version)
  • The Bahamas: Financial Sector Stability Assessment; IMF Country Report 13/101; January 18, 2013 (PDF)