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Matthew banks nyu1/6/2023 ![]() ![]() “Bank Rating Methodology”, April.įlannery, Mark J., and Sorin M. “Everything you wanted to know about Fitch IBCA and the BIS/Basle/rules but were too afraid/too baffle to ask”, March.įitch IBCA. “Deposit-Institution Failures: A Review of Empirical Literature”, Federal Reserve Bank of Cleveland, Economic Review, Fourth Quarter, 2–18.įitch IBCA. World Bank, Washington, DC.ĭemirguc-Kunt, Asli. “Monitoring Banking Sector Fragility: A Multivariate Logit Approach”, World Bank Economic Review. World Bank, Washington, DC, April 25–26.ĭernirguc-Kunt, Asli and Enrica Detragiache. Bank Insolvency: Bad Luck, Bad Policy, or Bad Banking? Paper prepared for the World Bank’s Annual Bank Conference on Development Economics. Building an Incentive-Compatible Safety Net, Journal of Banking and Finance, vol. World Bank, Washington, DC.Ĭalomiris, Charles. “The Political Economy of Distress in East Asian Financial Institutions”, photocopy. Bank for International Settlements, Basel, Switzerland.īongini, Paola, Stijn Claessens and Giovanni Ferri. “The New Basel Capital Accord”, Consultative Document (January). New York University.īasel Committee on Banking Supervision, 2000. ![]() ![]() #MATTHEW BANKS NYU SERIES#“An Analysis of the Causes of Savings and Loan Association Failures”, Monograph Series in Finance and Economics. “Thrift Institution Failures: Causes and Policy Issues”, in Bank Structure and Competition, Conference Proceedings, Federal Reserve Bank of Chicago, 380–95.īenston, George J. Dan Brumbaugh Jr., Daniel Sauerhaft, and George H.K. “An Analysis of the Causes of Savings and Loan Association Failures.” Monograph Series in Finance and Economics, New York University.īarth, James R., R. This process is experimental and the keywords may be updated as the learning algorithm improves.īenston, George J. These keywords were added by machine and not by the authors. In spite of these considerations, we believe that in facing the trade-off between “uniformity across countries” and “effective indicators”, rating agencies would be better off by focusing on the latter. The basic principle that “indicators work where markets work” is the leading guide to the selection of effective indicators. Instead, low spreads have often reflected the high-risk taking behavior of weak banks.Ī difficulty that rating agencies may encounter in considering the suggested approach in this paper is that the methodology implies that the appropriate indicators of banks ‘performance evolve over time as markets develop and that, given large differences among emerging markets, a single set of indicators will not “fit all”. In contrast to the interpretation of banks’ spreads in industrial countries, low spreads in emerging markets have not always indicated an increased in bank efficiency. Of the alternative indicators proposed in this paper, interest rate paid on deposits and interest rate spreads have proven to be strong performers. But such a system should be based not on the quality of banks loans or on levels of capitalization, but on the general principle that good indicators of banking problems are those that reveal the “true” riskiness of individual banks because they are based on markets that work rather than just relying on accounting figures. In spite of these problems, an appropriate set of indicators for banking problems in emerging markets can be constructed. This is because of (a) severe deficiencies in the accounting and regulatory framework and (b) lack of liquid markets for bank shares, subordinated debt and other bank liabilities and assets needed to validate the “real” worth of a bank as opposed to its accounting value. Among the conclusions, this paper shows that the most commonly used indicator of banking problems in industrial countries, the capital-to-asset ratio, has performed poorly as an indicator of banking problems in Latin America and East Asia. This paper suggests that such deficiencies could be explained by the use of financial indicators that, while appropriate for industrial countries, do not work in emerging markets. The rating agencies’ and bank supervisors’ records of prompt identification of banking problems in emerging markets has not been satisfactory. ![]()
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