Distress in European Banks: An Analysis Basedon a New Dataset

January 1, 2009

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Tigran Poghosyan, and Martin Cihak. Distress in European Banks: An Analysis Basedon a New Dataset, (USA: International Monetary Fund, 2009) accessed December 3, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The global financial crisis has highlighted the importance of early identification of weak banks: when problems are identified late, solutions are much more costly. Until recently, Europe has seen only a small number of outright bank failures, which made the estimation of early warning models for bank supervision very difficult. This paper presents a unique database of individual bank distress across the European Union from mid-1990s to 2008. Using this data set, we analyze the causes of banking distress in Europe. We identify a set of indicators and thresholds that can help to distinguish sound banks from those vulnerable to financial distress.

Subject: Bank soundness, Bank supervision, Banking, Distressed institutions, Early warning systems, Financial crises, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Loan loss provisions

Keywords: Bank analyst, Bank assets, Bank distress, Bank Pd, Bank PDs, Bank soundness, Bank supervision, Bank-year observation, Baseline hazard, Distressed institutions, Early Intervention, Early Warning System, Early warning systems, EU bank, Europe, European Union, Global, Loan loss provisions, Regulation, WP

Publication Details

Pages:

39
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/009
Stock No:

WPIEA2009009
ISBN:

9781451871562
ISSN:

1018-5941

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