IMF Staff Country Reports

Finland: Financial Sector Assessment Program: Technical Note-Stress Testing the Banking System and Interconnectedness Analysis

January 11, 2017

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Finland: Financial Sector Assessment Program: Technical Note-Stress Testing the Banking System and Interconnectedness Analysis, (USA: International Monetary Fund, 2017) accessed September 19, 2024

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. 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. Vulnerabilities include funding risks, contagion risks, and challenges related to long-term profitability.

Subject: Banking, Commercial banks, Credit, Credit risk, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Liquidity stress testing, Money, Stress testing

Keywords: Balance sheet size, Bank capitalization, Banking system, Commercial banks, Contagion risk, CR, Credit, Credit risk, Credit risk, Foreign currency, Funding cost, Global, Hurdle rate, Internal Ratings-Based model, ISCR, Liquidity position, Liquidity stress testing, Parent bank, Pillar II requirement, Risk parameter, Sensitivity analysis, Stress test result, Stress testing

Publication Details

  • Pages:

    85

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Country Report No. 2017/006

  • Stock No:

    1FINEA2017004

  • ISBN:

    9781475564921

  • ISSN:

    1934-7685