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Assessing Banking Sector Soundness in a Long-Term Framework: The Case of Venezuela

Author

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  • Mr. Rodolphe Blavy

Abstract

This paper combines financial soundness indicators (FSIs) and stress-testing methodologies to provide a broad assessment of the soundness of Venezuela's banking sector, based on a diagnosis of its structural and transient shortcomings. While the Venezuelan banking sector appears sound under current favorable economic conditions, it remains significantly vulnerable to cyclical downturns-which have been severe in the past. Banks are particularly exposed to interest rate and credit risks. This suggests that the strong FSIs may be partly the result of a conjunctural credit boom in the context of capital controls and very low real interest rates.

Suggested Citation

  • Mr. Rodolphe Blavy, 2006. "Assessing Banking Sector Soundness in a Long-Term Framework: The Case of Venezuela," IMF Working Papers 2006/225, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2006/225
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=19864
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    Citations

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    Cited by:

    1. Vazquez, Francisco & Tabak, Benjamin M. & Souto, Marcos, 2012. "A macro stress test model of credit risk for the Brazilian banking sector," Journal of Financial Stability, Elsevier, vol. 8(2), pages 69-83.
    2. María Fernanda Hernández & Juan José Valero & María Bernardette Díaz, 2007. "Perfil de riesgos del sistema bancario venezolano: aplicación de la metodología de stress testing," Monetaria, CEMLA, vol. 0(4), pages 405-452, octubre-d.
    3. Bojinov, Bojidar, 2014. "Improving the rating system for remote monitoring of commercial banks in Bulgaria (PERLA)," MPRA Paper 56035, University Library of Munich, Germany.

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