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Access and risk - friends or foes? Lessons from Chile

Author

Listed:
  • Adasme, Osvaldo
  • Majnoni, Giovanni
  • Uribe, Myriam

Abstract

This paper documents the link between risk, stability, and access to credit markets in an emerging economy. It presents annual credit loss distributions of Chilean banks for the period 1999-2005, providing the first empirical evidence of the cyclical pattern of expected losses and unexpected losses of bank loan portfolios in emerging countries. The paper provides three main contributions to the debate on bank solvency and access to credit markets. First, it derives nonparametric estimators of expected losses and unexpected losses, free from model error and, in particular, from distributional restrictions. Second, it shows how the distribution of credit losses for portfolios of retail and commercial loans is affected by the lumpiness of bank loans. Finally, it shows that the shape of credit loss distributions helps select appropriate policies to promote broader and sounder access to bank credit for the poor and the unbanked.

Suggested Citation

  • Adasme, Osvaldo & Majnoni, Giovanni & Uribe, Myriam, 2006. "Access and risk - friends or foes? Lessons from Chile," Policy Research Working Paper Series 4003, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4003
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    References listed on IDEAS

    as
    1. Laeven, Luc & Majnoni, Giovanni, 2003. "Loan loss provisioning and economic slowdowns: too much, too late?," Journal of Financial Intermediation, Elsevier, vol. 12(2), pages 178-197, April.
    2. Giovanni Majnoni & Andrew Powell, 2005. "Reforming Bank Capital Requirements: Implications of Basel II for Latin American Countries," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Spring 20), pages 105-149, January.
    3. Andrew Powell, 2004. "Implications of Basel II for Latin America," Business School Working Papers basel, Universidad Torcuato Di Tella.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Robert Cull & Asl? Demirgüç-Kunt & Timothy Lyman, 2012. "Financial Inclusion and Stability : What Does Research Show?," World Bank Other Operational Studies 9443, The World Bank.
    2. Banco de la República & Ministerio de Agricultura & Finagro, 2010. "Situación actual del microcrédito en Colombia: carácterísticas y experiencias," Temas de Estabilidad Financiera 048, Banco de la Republica de Colombia.
    3. Beck, Thorsten & Klapper, Leora F. & Mendoza, Juan Carlos, 2010. "The typology of partial credit guarantee funds around the world," Journal of Financial Stability, Elsevier, vol. 6(1), pages 10-25, April.

    More about this item

    Keywords

    Banks&Banking Reform; Investment and Investment Climate; Financial Intermediation; Economic Theory&Research; Insurance&Risk Mitigation;

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