Assessing Banking Sector Soundness in a Long-Term Framework: The Case of Venezuela

Rodolphe Blavy

No 2006/225, IMF Working Papers from International Monetary Fund

Abstract: This paper combines financial soundness indicators (FSIs) and stress-testing methodologies to provide a broad assessment of the soundness of Venezuela's banking sector, based on a diagnosis of its structural and transient shortcomings. While the Venezuelan banking sector appears sound under current favorable economic conditions, it remains significantly vulnerable to cyclical downturns-which have been severe in the past. Banks are particularly exposed to interest rate and credit risks. This suggests that the strong FSIs may be partly the result of a conjunctural credit boom in the context of capital controls and very low real interest rates.

Keywords: WP; central bank; bank regulation; a number of bank; bank behavior; bank legislation; banking sector indicator (search for similar items in EconPapers)
Pages: 31
Date: 2006-10-18
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2006/225

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