Norway: Financial Sector Assessment Program-Technical Note- Stress Testing the Banking Sector

International Monetary Fund

No 2015/258, IMF Staff Country Reports from International Monetary Fund

Abstract: This Technical Note discusses results of banking sector stress tests on Norway. The Norwegian banking sector is generally well prepared to cope with possible external shocks, but imbalances have built up in recent years and could pose challenges. The stress-testing exercise included a comprehensive analysis of solvency and liquidity risks in the banking sector. The stress test results show that while the banking sector is highly resilient, it could experience challenges in case of severe macroeconomic shocks, as assumed in the adverse scenarios. The stress tests also illustrate that the banking system remains vulnerable to liquidity risks, due in part to scarce liquidity buffers in Norwegian krone.

Keywords: ISCR; CR; aggregate banking sector assets; IRB model; bank loss; FX liquidity position; mortgage company; credit risk; liquidity stress tests; FSAP team; asset haircut; liquidity risk; asset portfolio; Stress testing; Credit risk; Financial stability assessment; Credit; Financial Sector Assessment Program; Global (search for similar items in EconPapers)
Pages: 49
Date: 2015-09-17
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