Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/208322
Authors: 
Huizinga, Harry
Laeven, Luc
Year of Publication: 
2019
Series/Report no.: 
ECB Working Paper 2288
Abstract: 
Loan loss provisions in the euro area are negatively related to GDP growth, i.e., they are procyclical. Loan loss provisions tend to be more procyclical at larger and better capitalized banks. The procyclicality of loan loss provisions can explain about two-thirds of the variation of bank capitalization over the business cycle. We estimate that provisioning procyclicality in the euro area is about twice as large as in other advanced economies. This difference reflects a larger procyclicality of provisioning in euro area countries already prior to euro adoption, and the divergent growth experiences of euro area countries following the global financial crisis.
Subjects: 
Banks
financial regulation
accounting
bank capital
loan loss provisioning
financial stability
JEL: 
G20
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-3550-0
Document Type: 
Working Paper

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