Credit Losses in Australasian Banking

Kurt Hess, Arthur Grimes and Mark Holmes

No 292657, Motu Working Papers from Motu Economic and Public Policy Research

Abstract: We analyse determinants of bank credit losses in Australasia. Despite sizeable credit losses over the past two decades, ours is the first systematic study to do so. Analysis is based on a comprehensive dataset retrieved from original financial reports of 32 Australasian banks (1980- 2005). Credit losses rise when the macro economy is weak. Asset markets, particularly the equity market, are also important. Larger banks provide more for credit losses while less efficient banks have greater asset quality problems. Strong loan growth translates into significantly higher credit losses with a lag of 2-4 years. Finally, the results show strong evidence of income smoothing activities by banks.

Keywords: Public; Economics (search for similar items in EconPapers)
Pages: 23
Date: 2008-06
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Related works:
Journal Article: Credit Losses in Australasian Banking (2009)
Working Paper: Credit Losses in Australasian Banking (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:motuwp:292657

DOI: 10.22004/ag.econ.292657

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