Access and Risk: Friends or Foes? Lessons from Chile

This paper documents the link between risk, stability, and access to credit markets in an emerging economy. It presents annual credit loss distributions of Chilean banks for the period 1999-2005, providing the first empirical evidence of the cyclical pattern of expected losses and unexpected losses...

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Main Authors:	Adasme, Osvaldo, Majnoni, Giovanni, Uribe, Myriam
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2012
Subjects:	ADVERSE SELECTION APPLICATIONS ASSET PRICING BALANCE OF PAYMENTS BANK CAPITAL BANK LENDING BANK LOANS BANK SOLVENCY BANK SUPERVISION BANKING REGULATION BANKING SYSTEM BANKING SYSTEMS BANKS BENCHMARK CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CENTRAL BANK COMMERCIAL BANKS COMMERCIAL LOANS COMMODITY PRICES CREDIT MARKETS CREDIT RISK CURRENT PRICES DEBT ECONOMIC GROWTH EMERGING MARKETS EXTERNALITIES FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL POLICIES FINANCIAL REPORTING FINANCIAL SERVICES FIXED ASSETS FORECASTS FUTURE RESEARCH GDP HOUSING INCOME INCOME DISTRIBUTION INCOME GROUPS INCOME LEVELS INTEREST RATE INTEREST RATES LABOR COSTS LATIN AMERICAN LOAN CLASSIFICATION LOAN LOSS PROVISIONS MACROECONOMIC CONDITIONS MORAL HAZARD NONPERFORMING LOANS PER CAPITA INCOME PORTFOLIO PORTFOLIOS POSITIVE EXTERNALITIES PRICING MODELS PROFITABILITY REAL INTEREST RATE RELATIONSHIP LENDING RESERVE REQUIREMENTS RESERVES RISK ASSESSMENT RISK EXPOSURE RISK EXPOSURES RISK FACTORS RISK MANAGEMENT RISK MANAGERS RISK MEASUREMENT ROE SOLVENCY REQUIREMENTS STATEMENT SUSTAINABILITY TIER 1 CAPITAL TRADE BALANCE TROUGH UNEMPLOYMENT UNEMPLOYMENT RATE
Online Access:	http://documents.worldbank.org/curated/en/2006/09/7036358/access-risk-friends-or-foes-lessons-chile http://hdl.handle.net/10986/9298

id	okr-10986-9298
recordtype	oai_dc
spelling	okr-10986-92982021-04-23T14:02:41Z Access and Risk: Friends or Foes? Lessons from Chile Adasme, Osvaldo Majnoni, Giovanni Uribe, Myriam ADVERSE SELECTION APPLICATIONS ASSET PRICING BALANCE OF PAYMENTS BANK CAPITAL BANK LENDING BANK LOANS BANK SOLVENCY BANK SUPERVISION BANKING REGULATION BANKING SYSTEM BANKING SYSTEMS BANKS BENCHMARK CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CENTRAL BANK COMMERCIAL BANKS COMMERCIAL LOANS COMMODITY PRICES CREDIT MARKETS CREDIT RISK CURRENT PRICES DEBT ECONOMIC GROWTH EMERGING MARKETS EXTERNALITIES FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL POLICIES FINANCIAL REPORTING FINANCIAL SERVICES FIXED ASSETS FORECASTS FUTURE RESEARCH GDP HOUSING INCOME INCOME DISTRIBUTION INCOME GROUPS INCOME LEVELS INTEREST RATE INTEREST RATES LABOR COSTS LATIN AMERICAN LOAN CLASSIFICATION LOAN LOSS PROVISIONS MACROECONOMIC CONDITIONS MORAL HAZARD NONPERFORMING LOANS PER CAPITA INCOME PORTFOLIO PORTFOLIOS POSITIVE EXTERNALITIES PRICING MODELS PROFITABILITY REAL INTEREST RATE RELATIONSHIP LENDING RESERVE REQUIREMENTS RESERVES RISK ASSESSMENT RISK EXPOSURE RISK EXPOSURES RISK FACTORS RISK MANAGEMENT RISK MANAGERS RISK MEASUREMENT ROE SOLVENCY REQUIREMENTS STATEMENT SUSTAINABILITY TIER 1 CAPITAL TRADE BALANCE TROUGH UNEMPLOYMENT UNEMPLOYMENT RATE This paper documents the link between risk, stability, and access to credit markets in an emerging economy. It presents annual credit loss distributions of Chilean banks for the period 1999-2005, providing the first empirical evidence of the cyclical pattern of expected losses and unexpected losses of bank loan portfolios in emerging countries. The paper provides three main contributions to the debate on bank solvency and access to credit markets. First, it derives nonparametric estimators of expected losses and unexpected losses, free from model error and, in particular, from distributional restrictions. Second, it shows how the distribution of credit losses for portfolios of retail and commercial loans is affected by the lumpiness of bank loans. Finally, it shows that the shape of credit loss distributions helps select appropriate policies to promote broader and sounder access to bank credit for the poor and the unbanked. 2012-06-26T21:11:12Z 2012-06-26T21:11:12Z 2006-09 http://documents.worldbank.org/curated/en/2006/09/7036358/access-risk-friends-or-foes-lessons-chile http://hdl.handle.net/10986/9298 English en_US Policy Research Working Paper; No. 4003 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean South America America Chile
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ADVERSE SELECTION APPLICATIONS ASSET PRICING BALANCE OF PAYMENTS BANK CAPITAL BANK LENDING BANK LOANS BANK SOLVENCY BANK SUPERVISION BANKING REGULATION BANKING SYSTEM BANKING SYSTEMS BANKS BENCHMARK CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CENTRAL BANK COMMERCIAL BANKS COMMERCIAL LOANS COMMODITY PRICES CREDIT MARKETS CREDIT RISK CURRENT PRICES DEBT ECONOMIC GROWTH EMERGING MARKETS EXTERNALITIES FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL POLICIES FINANCIAL REPORTING FINANCIAL SERVICES FIXED ASSETS FORECASTS FUTURE RESEARCH GDP HOUSING INCOME INCOME DISTRIBUTION INCOME GROUPS INCOME LEVELS INTEREST RATE INTEREST RATES LABOR COSTS LATIN AMERICAN LOAN CLASSIFICATION LOAN LOSS PROVISIONS MACROECONOMIC CONDITIONS MORAL HAZARD NONPERFORMING LOANS PER CAPITA INCOME PORTFOLIO PORTFOLIOS POSITIVE EXTERNALITIES PRICING MODELS PROFITABILITY REAL INTEREST RATE RELATIONSHIP LENDING RESERVE REQUIREMENTS RESERVES RISK ASSESSMENT RISK EXPOSURE RISK EXPOSURES RISK FACTORS RISK MANAGEMENT RISK MANAGERS RISK MEASUREMENT ROE SOLVENCY REQUIREMENTS STATEMENT SUSTAINABILITY TIER 1 CAPITAL TRADE BALANCE TROUGH UNEMPLOYMENT UNEMPLOYMENT RATE
spellingShingle	ADVERSE SELECTION APPLICATIONS ASSET PRICING BALANCE OF PAYMENTS BANK CAPITAL BANK LENDING BANK LOANS BANK SOLVENCY BANK SUPERVISION BANKING REGULATION BANKING SYSTEM BANKING SYSTEMS BANKS BENCHMARK CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CENTRAL BANK COMMERCIAL BANKS COMMERCIAL LOANS COMMODITY PRICES CREDIT MARKETS CREDIT RISK CURRENT PRICES DEBT ECONOMIC GROWTH EMERGING MARKETS EXTERNALITIES FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL POLICIES FINANCIAL REPORTING FINANCIAL SERVICES FIXED ASSETS FORECASTS FUTURE RESEARCH GDP HOUSING INCOME INCOME DISTRIBUTION INCOME GROUPS INCOME LEVELS INTEREST RATE INTEREST RATES LABOR COSTS LATIN AMERICAN LOAN CLASSIFICATION LOAN LOSS PROVISIONS MACROECONOMIC CONDITIONS MORAL HAZARD NONPERFORMING LOANS PER CAPITA INCOME PORTFOLIO PORTFOLIOS POSITIVE EXTERNALITIES PRICING MODELS PROFITABILITY REAL INTEREST RATE RELATIONSHIP LENDING RESERVE REQUIREMENTS RESERVES RISK ASSESSMENT RISK EXPOSURE RISK EXPOSURES RISK FACTORS RISK MANAGEMENT RISK MANAGERS RISK MEASUREMENT ROE SOLVENCY REQUIREMENTS STATEMENT SUSTAINABILITY TIER 1 CAPITAL TRADE BALANCE TROUGH UNEMPLOYMENT UNEMPLOYMENT RATE Adasme, Osvaldo Majnoni, Giovanni Uribe, Myriam Access and Risk: Friends or Foes? Lessons from Chile
geographic_facet	Latin America & Caribbean South America America Chile
relation	Policy Research Working Paper; No. 4003
description	This paper documents the link between risk, stability, and access to credit markets in an emerging economy. It presents annual credit loss distributions of Chilean banks for the period 1999-2005, providing the first empirical evidence of the cyclical pattern of expected losses and unexpected losses of bank loan portfolios in emerging countries. The paper provides three main contributions to the debate on bank solvency and access to credit markets. First, it derives nonparametric estimators of expected losses and unexpected losses, free from model error and, in particular, from distributional restrictions. Second, it shows how the distribution of credit losses for portfolios of retail and commercial loans is affected by the lumpiness of bank loans. Finally, it shows that the shape of credit loss distributions helps select appropriate policies to promote broader and sounder access to bank credit for the poor and the unbanked.
format	Publications & Research :: Policy Research Working Paper
author	Adasme, Osvaldo Majnoni, Giovanni Uribe, Myriam
author_facet	Adasme, Osvaldo Majnoni, Giovanni Uribe, Myriam
author_sort	Adasme, Osvaldo
title	Access and Risk: Friends or Foes? Lessons from Chile
title_short	Access and Risk: Friends or Foes? Lessons from Chile
title_full	Access and Risk: Friends or Foes? Lessons from Chile
title_fullStr	Access and Risk: Friends or Foes? Lessons from Chile
title_full_unstemmed	Access and Risk: Friends or Foes? Lessons from Chile
title_sort	access and risk: friends or foes? lessons from chile
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2006/09/7036358/access-risk-friends-or-foes-lessons-chile http://hdl.handle.net/10986/9298
_version_	1764406436728668160

Access and Risk: Friends or Foes? Lessons from Chile

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