{
  "title": "Finland: Financial Sector Assessment Program: Technical Note-Stress Testing the Banking System and Interconnectedness Analysis",
  "publication": "IMF Staff Country Reports, January 11, 2017",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2017/01/11/finland-financial-sector-assessment-program-technical-note-stress-testing-the-banking-system-44516",
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  "summary": "This Technical Note discusses the results of stress testing of Finland’s banking system. Despite high capitalization levels, there are important vulnerabilities in the Finnish banking system. Near-term risks are largely tilted to the downside, stemming from both external and domestic sources.",
  "publishDate": "2017-01-11",
  "series": "IMF Staff Country Reports",
  "sections": [
    {
      "heading": "Key findings and summary",
      "content": "- Discusses results of stress testing of Finland’s banking system.\n- Despite high capitalization levels, there are important vulnerabilities in the Finnish banking system.\n- Near-term risks are largely tilted to the downside, stemming from both external and domestic sources.\n- A sharper-than-expected global growth slowdown would be a drag on Finland’s export and GDP growth.\n- Although so far high compared with the rest of the euro area banks, Finnish banks’ profitability is facing challenges from the low interest rate environment and the low economic growth.\n- Identified vulnerabilities include funding risks, contagion risks, and challenges related to long-term profitability."
    },
    {
      "heading": "Risks and vulnerabilities (themes highlighted)",
      "content": "- External shock risk: global growth slowdown → adverse effects on exports and GDP growth.\n- Profitability pressures: low interest rate environment and low economic growth affecting bank profitability, despite currently higher profitability relative to other euro area banks.\n- Funding and liquidity risks: funding risks and liquidity stress testing considerations are noted as vulnerabilities.\n- Contagion and interconnectedness: contagion risks and parent/foreign bank linkages underline systemic interconnectedness concerns.\n- Long-term sustainability: challenges related to long-term profitability and hurdle rates."
    },
    {
      "heading": "Stress testing and analytical scope",
      "content": "- The Technical Note focuses on stress testing of the banking system and interconnectedness analysis.\n- Topics and technical elements referenced in the content include: balance sheet size, bank capitalization, Commercial banks, contagion risk, CR, Credit, credit risk, Internal Ratings-Based model, ISCR, liquidity position, Liquidity stress testing, parent bank, pillar II requirement, risk parameter, sensitivity analysis, stress test result, Stress testing.\n\n---\n\n Content in this bundle\n\n- Country Report\n  - Country Report (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Country Report (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/cr/issues/2017/01/11/finland-financial-sector-assessment-program-technical-note-stress-testing-the-banking-system-44516"
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    "Published: January 11, 2017",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781475564921.002",
    "Discusses results of stress testing of Finland’s banking system.",
    "Despite high capitalization levels, there are important vulnerabilities in the Finnish banking system.",
    "Near-term risks are largely tilted to the downside, stemming from both external and domestic sources.",
    "A sharper-than-expected global growth slowdown would be a drag on Finland’s export and GDP growth.",
    "Although so far high compared with the rest of the euro area banks, Finnish banks’ profitability is facing challenges from the low interest rate environment and the low economic growth.",
    "Identified vulnerabilities include funding risks, contagion risks, and challenges related to long-term profitability.",
    "External shock risk: global growth slowdown → adverse effects on exports and GDP growth.",
    "Profitability pressures: low interest rate environment and low economic growth affecting bank profitability, despite currently higher profitability relative to other euro area banks.",
    "Funding and liquidity risks: funding risks and liquidity stress testing considerations are noted as vulnerabilities.",
    "Contagion and interconnectedness: contagion risks and parent/foreign bank linkages underline systemic interconnectedness concerns.",
    "Long-term sustainability: challenges related to long-term profitability and hurdle rates.",
    "The Technical Note focuses on stress testing of the banking system and interconnectedness analysis.",
    "Topics and technical elements referenced in the content include: balance sheet size, bank capitalization, Commercial banks, contagion risk, CR, Credit, credit risk, Internal Ratings-Based model, ISCR, liquidity position, Liquidity stress testing, parent bank, pillar II requirement, risk parameter, sensitivity analysis, stress test result, Stress testing.",
    "**Country Report**"
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