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Dynamic Provisioning : Some Lessons from Existing Experiences

  • Santiago Fernández de Lis

    (Asian Development Bank Institute)

  • Alicia Garcia-Herrero
Registered author(s):

    After analyzing the different reasons why the financial system and also the regulatory framework induced procyclicality, this paper reviews the experiences of three countries which have introduced dynamic provisioning as a regulatory tool to limit procyclicality. The case of Spainthe country with the longest experienceis reviewed, as well as those of Colombia and Perucountries that have recently adopted dynamic provisioning. A number of policy lessons are drawn from that comparison.

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    File URL: http://saber.eaber.org/node/21882
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    Paper provided by East Asian Bureau of Economic Research in its series Finance Working Papers with number 21882.

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    Date of creation: Jan 2010
    Date of revision:
    Handle: RePEc:eab:financ:21882
    Contact details of provider: Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200
    Web page: http://www.eaber.org

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    1. Repullo, Rafael & Suarez, Javier, 2008. "The Procyclical Effects of Basel II," CEPR Discussion Papers 6862, C.E.P.R. Discussion Papers.
    2. Jesús Saurina & Carlos Trucharte, 2007. "An Assessment of Basel II Procyclicality in Mortgage Portfolios," Journal of Financial Services Research, Springer, vol. 32(1), pages 81-101, October.
    3. Lepetit, Laetitia & Nys, Emmanuelle & Rous, Philippe & Tarazi, Amine, 2008. "The expansion of services in European banking: Implications for loan pricing and interest margins," Journal of Banking & Finance, Elsevier, vol. 32(11), pages 2325-2335, November.
    4. Gabriel Jiménez & Jesús Saurina, 2006. "Credit Cycles, Credit Risk, and Prudential Regulation," International Journal of Central Banking, International Journal of Central Banking, vol. 2(2), May.
    5. Jesús Saurina & Carlos Trucharte, 2007. "An assessment of Basel II procyclicality in mortgage portfolios," Banco de Espa�a Working Papers 0712, Banco de Espa�a.
    6. Devenow, Andrea & Welch, Ivo, 1996. "Rational herding in financial economics," European Economic Review, Elsevier, vol. 40(3-5), pages 603-615, April.
    7. Alicia Garcia-Herrero & Santiago Fernandez de Lis, 2008. "The Housing Boom and Bust in Spain: Impact of the Securitisation Model and Dynamic Provisioning," Working Papers 0806, BBVA Bank, Economic Research Department.
    8. Jesus, Saurina & Gabriel, Jimenez, 2006. "Credit Cycles, Credit Risk, and Prudential Regulation," MPRA Paper 718, University Library of Munich, Germany.
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