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Distress in European Banks: An Analysis Basedon a New Dataset

Tigran Poghosyan and Martin Cihak (mcihak@hotmail.com)

No 2009/009, IMF Working Papers from International Monetary Fund

Abstract: The global financial crisis has highlighted the importance of early identification of weak banks: when problems are identified late, solutions are much more costly. Until recently, Europe has seen only a small number of outright bank failures, which made the estimation of early warning models for bank supervision very difficult. This paper presents a unique database of individual bank distress across the European Union from mid-1990s to 2008. Using this data set, we analyze the causes of banking distress in Europe. We identify a set of indicators and thresholds that can help to distinguish sound banks from those vulnerable to financial distress.

Keywords: WP; bank distress; EU bank; baseline hazard; bank assets; bank Pd; bank PDs; bank-year observation; European Union; Early Warning System; Regulation; Early Intervention; bank analyst; Early warning systems; Distressed institutions; Loan loss provisions; Bank supervision; Bank soundness; Europe; Global (search for similar items in EconPapers)
Pages: 39
Date: 2009-01-01
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Citations: View citations in EconPapers (37)

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