Financial Stability Review
Risk Assessment Articles
2002
2005 2004 2003 2002 2001 2000 1999 1998 1997
UK
Interbank Exposures: Systemic Risk Implications
(95k)
(Issue 13, December 2002)
A well-functioning interbank market is essential for efficient financial intermediation. But in exceptional circumstances, interlinkages between banks may provide a channel through which financial difficulties in an individual bank can be propagated to other banks. As part of theoretical efforts to understand these mechanisms, this article explores, in a stylised way, the effect of one type of extreme event – the sudden and unexpected insolvency of a single bank.
Is
There Still Magic in Corporate Earnings?
(123k)
(Issue 13, December 2002)
This article surveys different earnings measures from the perspective of equity market valuations in the UK and the USA. It reviews three commonly used financial accounting definitions: reported, operating and pro forma earnings. These measures are then compared with national accounts-based measures of aggregate corporate earnings. The strengths and weaknesses of each measure are considered together with their implications for equity market valuations.
Spillovers
from Recent Emerging Market Crises: What Might Account for Limited
Contagion from Argentina?
(84k)
(Issue 12, June 2002)
The current crisis in Argentina has been notable for the lack of substantial spillovers to other emerging market economies (EMEs), particularly relative to earlier episodes of EME turbulence such as the crisis in Asia in 1997/98. This article considers factors that might account for this change. One is that investors have differentiated more between the crisis economy and other EME credits than during earlier crises, perhaps because of shifts in the composition of the EME investor base and widespread anticipation of the Argentine crisis. Another is that the vulnerability to shocks of those EMEs with close trade and financial ties to Argentina is lower than was the case in previous crises such as Thailand in 1997. Changes in investor behaviour may mean that contagious crises are less likely in the future. However if limited spillovers partly reflect the lower fragility of EMEs closely linked to Argentina, then future problems in other EMEs might still result in contagion.
Bank
Provisioning: the UK Experience
(123k)
(Issue 12, June 2002)
Bank provisions – made in recognition of a deterioration in loan quality – can have a significant impact on banks’ earnings and capital. This article examines the factors that may, in the past, have influenced provisioning by the major UK banks. It suggests that macroeconomic conditions played a particularly important role. Bank-specific factors such as the sectoral concentration of debt, especially if in risky sectors, such as commercial property, were also influential.
UK
Bank Exposures: Data Sources and Financial Stability Analysis
(537k)
(Issue 12, June 2002)
In recent years there has been an increasing effort – in the UK and elsewhere – to assess financial stability risks at the level of the system as a whole. A crucial element is the analysis of banking exposures and the robustness of banks to adverse shocks. In the UK, as in other countries, there is no single source of data explicitly designed for financial stability analysis at the level of the system. This article reviews the data sources that are available and how they are employed in the Bank’s analysis to help the reader of the Financial Stability Review understand the data underlying the Bank’s published assessments of the UK banking sector.
Key Resources
|
Memorandum of Understanding between HM Treasury,
the Bank of England and the Financial Services Authority
Download PDF (50k) |
