Dynamic Provisioning

Dynamic Provisioning

Dynamic loan loss provisions can help deal with procyclicality in banking. By allowing earlier detection and coverage of credit losses in loan portfolios, they enable banks to build up a buffer in good times that can be used in bad times. Their ant...

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Bibliographic Details
Main Author: Saurina, Jesus
Format: Brief
Language:English
Published: World Bank, Washington, DC 2012
Subjects:
ACCOUNTING
ACCOUNTING FRAMEWORK
ACCOUNTING STANDARD
ACCOUNTING STANDARDS
ACCURATE INFORMATION
AGENCY PROBLEMS
ASSETS
BALANCE SHEET
BALANCE SHEETS
BANK FOR INTERNATIONAL SETTLEMENTS
BANK MANAGEMENT
BANKING CRISIS
BANKING SYSTEM
BANKS
BANQUE DE FRANCE
BUSINESS CYCLE
CENTRAL BANK
CENTRAL BANKING
CONSUMER
CONSUMER DURABLES
CREDIT BUREAUS
CREDIT CARD
CREDIT CARDS
CREDIT CRUNCH
CREDIT EXPANSION
CREDIT GROWTH
CREDIT LOSS
CREDIT LOSSES
CREDIT POLICIES
CREDIT RISK
DEDUCTIBLE
DEPOSIT
DEPOSIT INSTITUTIONS
EARNINGS
EMERGING ECONOMIES
FAIR VALUE
FINANCIAL CRISIS
FINANCIAL INTERMEDIATION
FINANCIAL POSITION
FINANCIAL POSITIONS
FINANCIAL REFORMS
FINANCIAL REPORTING
FINANCIAL SERVICES
FINANCIAL SERVICES AUTHORITY
FINANCIAL STABILITY
FINANCIAL STATEMENTS
FINANCIAL SYSTEM
FISCAL POLICIES
GLOBAL BANKING
INCREASE IN INCOME
INDIVIDUAL BANKS
INDIVIDUAL LOAN
INDIVIDUAL LOANS
INFORMATION ABOUT CREDIT
INFORMATION ON CREDIT
INSTRUMENT
INVESTMENT BANKS
INVESTMENT PROJECTS
JURISDICTIONS
LENDERS
LENDING CYCLE
LOAN
LOAN LOSS
LOAN LOSS PROVISIONING
LOAN LOSS PROVISIONS
LOAN LOSSES
LOAN PORTFOLIO
LOAN PORTFOLIOS
MACROECONOMIC VOLATILITY
MONETARY POLICY
MORAL SUASION
MORTGAGES
NET OPERATING INCOME
NONPERFORMING LOANS
OVERDRAFTS
POLICY RESPONSES
PRIVATE CREDIT
PRIVATE CREDIT BUREAUS
PROBABILITIES
PROBABILITY
PROBABILITY OF DEFAULT
PROBLEM LOANS
PRUDENTIAL REGULATION
PUBLIC POLICY
REALITY CHECK
RECESSION
RECESSIONS
RESERVE
RESERVES
RISK PREMIUMS
RISK TAKING
SECURITIES
SOLVENCY
SOURCE OF INFORMATION
SPECIALIZED BANKS
TAX
TAX TREATMENT
TIER 2 CAPITAL
TRADING
TYPE OF LOAN
TYPES OF LOAN
UNION
VALUATION
Online Access:http://documents.worldbank.org/curated/en/2009/07/11077297/dynamic-provisioning
http://hdl.handle.net/10986/10241
Description
Summary:Dynamic loan loss provisions can help deal with procyclicality in banking. By allowing earlier detection and coverage of credit losses in loan portfolios, they enable banks to build up a buffer in good times that can be used in bad times. Their anticyclical nature enhances the resilience of both individual banks and the banking system as a whole. While there is no guarantee that they will be enough to cope with all the credit losses of a downturn, dynamic provisions have proved useful in Spain during the current financial crisis. They could be an important prudential tool for emerging economies, where banks dominate financial intermediation.

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