Forward looking loan provisions : credit supply and risk-taking
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- dc.contributor.author Morais, Bernardo
- dc.contributor.author Ormazabal, Gaizka
- dc.contributor.author Peydró, José-Luis
- dc.contributor.author Roa, Mónica
- dc.contributor.author Sarmiento, Miguel
- dc.date.accessioned 2020-09-02T12:25:13Z
- dc.date.available 2020-09-02T12:25:13Z
- dc.date.issued 2020-08
- dc.description.abstract We show corporate-level real, financial, and (bank) risk-taking effects associated with calculating loan provisions based on expected—rather than incurred—credit losses. For identification, we exploit unique features of a Colombian reform and supervisory, matched loan-level data. The regulatory change induces a dramatic increase in provisions. Banks tighten all new lending conditions, adversely affecting borrowing-firms, with stronger effects for risky-firms. Moreover, to minimize provisioning, more affected (less-capitalized) banks cut credit supply to risky-firms— SMEs with shorter credit history, less tangible assets or more defaulted loans—but engage in “search-for-yield” within regulatory constraints and increase portfolio concentration, thereby decreasing risk diversification.ca
- dc.format.mimetype application/pdf*
- dc.identifier.uri http://hdl.handle.net/10230/45250
- dc.language.iso engca
- dc.rights.accessRights info:eu-repo/semantics/openAccessca
- dc.subject.other Loan provisionsca
- dc.subject.other IFRS9ca
- dc.subject.other ECLca
- dc.subject.other Corporate real and credit supply effects of accountingca
- dc.subject.other Bank risk-takingca
- dc.title Forward looking loan provisions : credit supply and risk-takingca
- dc.type info:eu-repo/semantics/workingPaperca