Credit Cycle and Capital Buffers in Central America, Panama, and the Dominican Republic

Flamini, Valentina; Bologna, Pierluigi; Vittorio, Fabio Di; Zandvakil, Rasool

doi:10.5089/9781484397992.001

Cited by 1 publication

(3 citation statements)

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“…The moderate level of the corporate sector will encourage healthy and sustainable investment. A healthy banking system will be created when the bank can select and assess the creditworthiness of debtors (customers) (Flamini et al, 2019).…”

Section: Credit Cyclementioning

confidence: 99%

“…CCB is counter-cyclical, thus contribute to countering the pro-cyclical of the financial system due to an increase in credit cycles. In the downturn, CCB will help to reduce the risk that credit supply is constrained by overly tight capital requirements that could trigger a credit supply crisis, undermine real economic performance, and result in future credit losses (Flamini et al, 2019).…”

Section: Credit Cyclementioning

confidence: 99%

“…The credit cycle is defined as the deviation of the credit-to-GDP ratio from its long-term trend. This measure has been introduced by BCBS (2010) as the main reference indicator calibrating CCB mainly because of its forecasting power in predicting banking crises in many countries (Flamini et al, 2019;Frait et al, 2015). With this proxy, empirical evidence is found that the credit gap is a strong predictor of systemic vulnerability.…”

Section: Credit Cyclementioning

confidence: 99%

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The Effectiveness of Banking Countercyclical Policies in the Development of Priority Economic Sectors in Indonesia

Nugroho

Kurnia

2021

GReviewIEB

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Economic development leads to the evolution and improvement of the financial system. In particular, banks grew relatively larger than national output in line with economic developments. This study aims to analyze how banking policy can cause multiplier effects for the macroeconomic sector and be able to reduce the procyclicality of the banking sector with economic growth that touches the aspect of reverse causality. To answer this concern, many international forums approved the formation of documents one of which includes macroprudential aspects by developing countercyclical capital buffer (CCB) indicators that function to monitor the level of procyclicality of the financial system. The research period used is quarterly data from 2010Q1 to 2019Q4. The analytical tool used is structural vector autoregression (SVAR). Based on the results of the impulse response function, all macroeconomic variables used in this study, namely real GDP, inflation, investment, and the exchange rate respond negatively to CCB policies in conventional banks, Islamic banks, and both. The biggest contribution of the three bank models is to the investment variable. Based on the results of sector mapping, it was found that the direction of the development of Indonesia's priority sectors was in the secondary sector or business fields related to the processing industry, such as both food and beverage, clothing and textiles, and chemicals. Public and foreign public confidence in the products of the processing industry in Indonesia is certainly inseparable from the guarantee of certainty in doing business and investment security that will increase the flow of private capital, especially foreign direct investment. This investment security guarantee is an effect of good financial capital liquidity.

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Section: Credit Cyclementioning

confidence: 99%

Section: Credit Cyclementioning

confidence: 99%

Section: Credit Cyclementioning

confidence: 99%

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