Loan Review, Provisioning, and Macroeconomic Linkages

International Monetary Fund

No 2000/195, IMF Working Papers from International Monetary Fund

Abstract: Loan review is a process routinely used by banks to assess the current value of loan portfolios. Provisioning is a technique to translate loan review results into the balance sheet. It allows for ongoing valuation of loans. Both are core elements of credit risk management and important to prudential oversight. As illustrated in this paper, valuation feeds into indicators of overall bank soundness and key macroprudential indicators. Country practices and recent moves to more forward-looking models are surveyed. Macroeconomic linkages are highlighted, including tax treatment of provisions, variables of the monetary survey, and procyclical aspects of loan valuation systems.

Keywords: WP; loan valuation; loan review; restructured loan; bank supervisor; bank behavior; loan takedown; loan value; Nonperforming loans; cyclical bank behavior; capital ratios; loan quality; loan provisioning; Loans; Capital adequacy requirements; Loan classification; Credit; West Africa (search for similar items in EconPapers)
Pages: 32
Date: 2000-12-01
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Citations: View citations in EconPapers (16)

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