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The provisioning experience of the major UK banks: a small panel investigation

  • Darren Pain
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    Using panel regression analysis, the factors that may help to explain increases in loan-loss provisions for the major UK banks are investigated. Explanatory variables reviewed include aggregate variables such as GDP growth as well as bank-specific factors such as the composition of the loan portfolio. The main findings are that a number of macroeconomic variables can indeed inform about banks' provisions, in particular real GDP growth, real interest rates and lagged aggregate lending growth. Bank-specific behaviour is also important - increased lending to riskier sectors, such as commercial property companies, has generally been associated with higher provisions.

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    File URL: http://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/2003/wp177.pdf
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    Paper provided by Bank of England in its series Bank of England working papers with number 177.

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    Date of creation: Feb 2003
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    Handle: RePEc:boe:boeewp:177
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