The Bahamas: Financial Sector Assessment Program-Technical Note on Financial Stability and Stress Testing

International Monetary Fund

No 2019/202, IMF Staff Country Reports from International Monetary Fund

Abstract: Macrofinancial risks stem from the economy’s vulnerability to external shocks to tourism and real estate investment, exposure to frequent and severe hurricanes, and a small and illiquid real estate market. Stress tests reveal the overall banking system is resilient to a range of adverse scenarios given large aggregate capital and liquidity buffers. Some domestic banks and the two largest credit unions are more vulnerable to asset quality shocks and tail risk conditions. Asset quality and profitability are key determinants of financial institutions’ resilience to adverse shocks. Liquidity, market, sovereign and financial contagion risks are low. The offshore banking sector is not a source of traditional banking risks.

Keywords: ISCR; CR; central bank; interest rate; banking sector; credit risk; NPL ratio; hurdle rate; bank asset quality; maturity mismatch; bank assets; price index; NPL level; bond portfolio; bank portfolio; credit loss; bank performance; Nonperforming loans; Credit; Credit bureaus; Stress testing; Natural disasters; Global (search for similar items in EconPapers)
Pages: 67
Date: 2019-07-01
New Economics Papers: this item is included in nep-rmg
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