HEAT! A Bank Health Assessment Tool
IMF Working Papers, August 9, 2013
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Bibliographic details
- Authors: Li L Ong, Phakawa Jeasakul, Sarah Kwoh
- Published: August 9, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484385227.001
Summary
- Developments during the global financial crisis highlighted the importance of differentiating across financial systems and institutions.
- Assessments of financial stability have increasingly considered the characteristics of individual banks within a financial system, as well as those with significant international reach, to identify vulnerabilities and inform policy decisions.
- This paper proposes a simple measure of bank soundness, the Bank Health Index (BHI), to facilitate preliminary analyses of individual financial institutions relative to their peers.
- Evidence in the paper suggests that the BHI is useful for a first-pass identification of bank soundness conditions.
- Automated spreadsheet templates of the bank Health Assessment Tool (HEAT!) are provided for users with access to the BankScope, Bloomberg and/or SNL database(s).
Bank Health Index (BHI) and HEAT! tool
- BHI: proposed as a simple measure of bank soundness for preliminary, peer-relative analyses.
- HEAT!: automated spreadsheet templates accompany the methodology to operationalize the BHI for users with access to BankScope, Bloomberg and/or SNL.
Key findings and focus areas
- The tool and index focus on identifying bank soundness conditions across:
- asset quality
- capital adequacy
- leverage
- liquidity
- earnings
- loan portfolio and Nonperforming loans
- Intended for use in assessments of commercial banks, financial institutions, and Global systemically important banks to inform financial sector policy and analysis.
Policy relevance and use
- Designed to support preliminary identification of vulnerabilities at individual banks to inform policy decisions in financial stability work.
- Useful for cross-bank and peer comparisons as part of broader supervisory and stability assessments.
Publication and metadata
- Authors: Li L Ong, Phakawa Jeasakul, Sarah Kwoh
- Date: August 9, 2013
- Series: Working Paper No. 2013/177
- Issue: 177
- Volume: 2013
- Pages: 20
- DOI: https://doi.org/10.5089/9781484385227.001
- Stock No: WPIEA2013177
- ISBN: 9781484385227
- ISSN: 1018-5941
- Subjects: Bank soundness; Banking; Commercial banks; Financial institutions; Financial sector policy and analysis; Global systemically important banks; Loans; Nonperforming loans
- Keywords: asset quality; bank health; bank Health Assessment Tool; Bank Health Index; bank soundness; capital adequacy; Commercial banks; earnings; financial statements data; Global; Global systemically important banks; group of bank; HEAT!; heatmap; leverage; liquidity; loan portfolio; Loans; Nonperforming loans; WP
IMF Working Paper: "HEAT! A Bank Health Assessment Tool", Li L Ong, Phakawa Jeasakul, Sarah Kwoh, August 9, 2013.