Forward looking loan provisions: Credit supply and risk-taking

Arbeitspapier

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.

Angaben zum Objekt

• Sprache: Englisch

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Price Level; Inflation; Deflation ; General Financial Markets: Government Policy and Regulation ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financial Institutions and Services: Government Policy and Regulation
• Thema: loan provisions ; IFRS9 ; corporate real and credit supply effects of accounting ; bank risk-taking

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Morais, Bernardo ; Ormazabal, Gaizka ; Peydró, José-Luis ; Roa, Monica ; Sarmiento, Miguel
• Ereignis: Veröffentlichung
• (wer): ZBW – Leibniz Information Centre for Economics
• (wo): Kiel, Hamburg
• (wann): 2020

Weitere Informationen

• Handle: http://hdl.handle.net/10419/223234
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ