scholarly journals Robustness, Validity and Significance of the ECB's Asset Quality Review and Stress Test Exercise

2014 ◽  
Author(s):  
Sascha Steffen
Keyword(s):  
Stress Test ◽  
Quality Review ◽  
Test Exercise ◽  
Asset Quality

Bank Cleanups, Capitalization, and Lending: Evidence from India

2020 ◽  
Author(s):  
Yakshup Chopra ◽  
Krishnamurthy Subramanian ◽  
Prasanna L Tantri
Keyword(s):  
Information Asymmetry ◽  
Risk Shifting ◽  
Real Economy ◽  
Economic Stability ◽  
The Real ◽  
Quality Review ◽  
Shadow Banks ◽  
Zombie Lending ◽  
Asset Quality ◽  
The Impact

Abstract We examine the Indian bank asset quality review, which doubled the declared loan delinquency rate. Relative economic stability during the exercise and the absence of a capital backstop together make it unique. We find that the expected reduction in information asymmetry does not automatically lead to the recapitalization of banks by markets. The consequent undercapitalization leads to underinvestment and risk-shifting through zombie lending. The impact flows to the real economy through borrowers, including shadow banks, and adversely impacts growth. These findings show that bank cleanup exercises not accompanied by policies aimed at recapitalization may be insufficient even during normal times.

Determining Risk Factors that Diminish Asset Quality of Indian Commercial Banks

2019 ◽  
pp. 097215091986147 ◽  
Author(s):  
Onkar Shivraj Swami ◽  
B. Nethaji ◽  
Jyoti Prakash Sharma
Keyword(s):  
Risk Factors ◽  
Commercial Banks ◽  
Managerial Efficiency ◽  
Quality Review ◽  
Reserve Bank ◽  
Review Period ◽  
Asset Quality ◽  
Diversified Portfolio ◽  
Reserve Bank Of India

Controlling higher level of non-performing loans (NPLs) has become one of the key objectives of the Reserve Bank of India (RBI), as it may impact banking and macroeconomic stability adversely. In this respect, the present study tries to determine risk factors that diminish asset quality of Indian commercial banks in and around the asset quality review period. Pooled and panel logit model has been employed to examine the determinants of NPLs. We find that banks with lower level of capital, reduced profitability, less diversified portfolio, poor operating and managerial efficiency are at greater risk of having diminished asset quality, whereas the size of the bank is positively linked with the higher level of NPAs. In general, empirical analysis proposes that to identify the bank whose asset quality is likely to deteriorate well in advance, the Regulatory and Supervisory Department of the Central Bank may consider lower level of capital, deteriorating profitability and poor operational efficiency as a leading indicator.

scholarly journals Republic of Kazakhstan

2020 ◽  
Vol 20 (32) ◽  
Author(s):  
Keyword(s):  
Oil And Gas ◽  
Oil Prices ◽  
The Political ◽  
Fiscal Consolidation ◽  
Fiscal Stimulus ◽  
Quality Review ◽  
Retail Credit ◽  
Asset Quality ◽  
Household Borrowing ◽  
Productivity Gains

The political transition has increased the focus on social conditions and regional and rural development. Growth has been buoyed by new spending, retail credit, and oil and gas investments. Inflation has picked up, and the current account has deteriorated. Renewed fiscal consolidation is planned from 2020. Non-oil growth is expected to moderate to 4 percent (potential), as construction, fiscal stimulus, and household borrowing ease. Growth could be higher if decisive reforms drive productivity gains. The state continues to play a strong role in the economy, and the authorities face challenges ensuring that measures are well targeted and effective in promoting private sector growth. The challenges include oil volatility and dependency, reliance on subsidies and other state support, still-impaired banks, and governance vulnerabilities. The authorities are exploring ways to strengthen the fiscal framework, assessing monetary and exchange policies, undertaking a bank asset quality review (AQR), and establishing an independent financial sector regulator. Progress is being made on headline reforms, but ensuring decisive changes on the ground remains a challenge. Risks relate to oil prices and trading partner growth.

scholarly journals Bank Stress Testing: A Stochastic Simulation Framework to Assess Banks’ Financial Fragility

Risks ◽  
2018 ◽  
Vol 6 (3) ◽  
pp. 82 ◽  
Author(s):  
Giuseppe Montesi ◽  
Giovanni Papiro
Keyword(s):  
Stochastic Simulation ◽  
Stress Testing ◽  
Stress Test ◽  
Capital Adequacy ◽  
Financial Fragility ◽  
Forecasting Model ◽  
Probability Of Default ◽  
Stress Tests ◽  
Simulation Framework ◽  
Test Exercise

We present a stochastic simulation forecasting model for stress testing that is aimed at assessing banks’ capital adequacy, financial fragility, and probability of default. The paper provides a theoretical presentation of the methodology and the essential features of the forecasting model on which it is based. Also, for illustrative purposes and to show in practical terms how to apply the methodology and the types of outcomes and analysis that can be obtained, we report the results of an empirical application of the methodology proposed to the Global Systemically Important Banks (G-SIB) banks. The results of the stress test exercise are compared with the results of the supervisory stress tests performed in 2014 by the Federal Reserve and EBA/ECB.

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