Are basel capital standards pro-cyclical? Some empirical evidence from India
By: Ghosh, Saibal.
Contributor(s): Nachane, D.M.
Material type:
ArticlePublisher: 2003Description: p.777-84.Subject(s): Banks - India | Banks
In:
Economic and Political WeeklySummary: The debate on bank capital regulation has in recent years devoted specific attention to the role that bank loan loss provisions play as a part of the overall minimum capital regulatory framework. The new Capital Accord is also attempting to address provisioning practices within a broad capital regulatory framework. This paper contributes to the debate by exploring the available evidence about bank loan loss provisioning in the Indian context. Using data on state-owned banks for the period 1997-2002, we find that banks tend to delay provisioning for bad loans until too late, possibly magnifying the impact of the economic cycles on their income and capital. - Reproduced.
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Articles
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Indian Institute of Public Administration | Volume no: 38, Issue no: 8 | Available | AR56216 |
The debate on bank capital regulation has in recent years devoted specific attention to the role that bank loan loss provisions play as a part of the overall minimum capital regulatory framework. The new Capital Accord is also attempting to address provisioning practices within a broad capital regulatory framework. This paper contributes to the debate by exploring the available evidence about bank loan loss provisioning in the Indian context. Using data on state-owned banks for the period 1997-2002, we find that banks tend to delay provisioning for bad loans until too late, possibly magnifying the impact of the economic cycles on their income and capital. - Reproduced.
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