Assessing Banking Sector Soundness in a Long-Term Framework: The Case of Venezuela
33 Pages Posted: 13 Nov 2006
Date Written: October 2006
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.
JEL Classification: E44, G1, G21, G28
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Stress Testing of Financial Systems: An Overview of Issues, Methodologies, and Fsap Experiences
By Winfrid Blaschke, Matthew T. Jones, ...
-
Stress Testing Financial Systems: What to Do When the Governor Calls
By Matthew T. Jones and Paul Hilbers
-
Accounting, Prudential Regulation and Financial Stability: Elements of a Synthesis
-
Introduction to Applied Stress Testing
By Martin Čihák
-
Risk in Financial Reporting: Status, Challenges and Suggested Directions
-
Analysing Banking Sector Conditions: How to Use Macro-Prudential Indicators
By Leena M Mörttinen, Paolo Poloni, ...
-
By Markus K. Brunnermeier, Gary B. Gorton, ...
-
Estimating Spillover Risk Among Large EU Banks
By Li Ong and Martin Čihák
-
Macroeconomic Stress and Worst Case Analysis of Loan Portfolios
By Thomas Breuer, Martin Jandacka, ...