Financial Stability Review
Business & Household Finance Articles
2001
Analysing
Corporate and Household Sector Balance Sheets
(147k)
(Issue 11, December 2001)
One of the Bank of England's current objectives is to develop a more quantitative framework for the calibration and analysis of risks to financial stability in the UK. This paper reports on one possible approach to assessing risks in the UK corporate and household sectors, which together account for about half of the UK banking sector's total exposures. The approach links these exposures to key macroeconomic factors, but it also takes into account microeconomic influences arising from the distribution of debt among individual companies and households. The article also shows how the framework can be used in regular surveillance, in the generation of projections and analysis of the risks to those projections, and in the exploration of stress-testing scenarios.
Corporate
Liquidations in the United Kingdom
(107k)
(Issue 10, June 2001)
Understanding the factors determining corporate liquidations is one ingredient of prudent banking. This article investigates these in a UK context. It suggests that the substantial rise in corporate liquidations during the recession in the early 1990s mainly reflected deteriorating company finances, including a marked build-up of indebtedness. In the subsequent recovery, however, rising GDP relative to trend and other macroeconomic factors seem to have had greater explanatory power than changes in company finances in accounting for the fall in the corporate liquidations rate to its currently low level.
Key Resources
|
Memorandum of Understanding between HM Treasury,
the Bank of England and the Financial Services Authority
Download PDF (50k) |
