How a changing economy can impact loan losses

Catharine Lemieux and Kenneth Spong

American Bankers Association, 1993, vol. 06, issue 3

Abstract: Researchers studied loan losses and their relationship to loss reserves at agricultural banks from 1980-1989 and 1962-1975. The results indicate that loss reserves are best set after a historical study of loan classifications, losses, and internal loan reviews; also, the amount of required reserves will depend on economic conditions. Loans classified as the economy deteriorates, for example, have far higher loss rates than those classified as the economy improves.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Date: 1993
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