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Credit Growth, Problem Loans and Credit Risk Provisioning in Spain

Author

Listed:
  • Santiago Fernández de Lis

    (Banco de España)

  • Jorge Martínez Pagés

    (Banco de España)

  • Jesús Saurina

    (Banco de España)

Abstract

This paper analyses the cyclical behaviour of bank credit, loan losses and provisions for loan losses in Spain. These three variables are strongly cyclical in Spain -as in many other countries- and this poses some problems to bank supervisors and regulators. In a context of strong competitive pressures, there is a tendency for loose bank credit conditions in an upturn in view of the low level of contemporaneous non-performing loans. This may contribute to an over-extension of credit.The paper explains in detail the rationale and expected effects of the new loan loss provision the so-called statistical provision- introduced recently by the Banco de España and aimed at an appropriate recording and recognition of expected losses.

Suggested Citation

  • Santiago Fernández de Lis & Jorge Martínez Pagés & Jesús Saurina, 2000. "Credit Growth, Problem Loans and Credit Risk Provisioning in Spain," Working Papers 0018, Banco de España.
    • Handle: RePEc:bde:wpaper:0018
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    More about this item

    Keywords

    banks; behaviour; credit; risk;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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