Macroprudential policy analysis and tools - Monitoring euro area banks’ risk weight developments

M. Caccavaio and C. Rodriguez d´Acri

Macroprudential Bulletin, 2016, vol. 2

Abstract: While risk-taking by financial institutions can foster the intermediation needed to support economic recovery, if excessive it can lead to the build-up of financial imbalances, especially in a low yield environment where institutions struggle to boost their profitability. To ensure that macroprudential policy measures are effective in preserving financial stability, the regular monitoring of financial institutions’ risk-taking behaviour is required. By using detailed bank-level information on SSM significant institutions’ asset developments in the last year, this analysis shows that, at the current juncture, banks are de-risking and reshuffling their portfolios towards safer assets. Evidence of de-risking is identified in the reduction in average risk weights and the shift towards exposures with lower PDs. JEL Classification: G00

Keywords: macroprudential policy; risk-taking; financial stability (search for similar items in EconPapers)
Date: 2016-10
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.ecb.europa.eu/pub/pdf/mpbu/ecbmpbu2016 ... fde1c8a45b39639a151d (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbmbu:2016:0002:2

Access Statistics for this article

More articles in Macroprudential Bulletin from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().