The provisioning experience of the major UK banks: a small panel investigation

Working papers set out research in progress by our staff, with the aim of encouraging comments and debate.
Published on 21 February 2003

Working Paper no. 177
By Darren Pain

Using panel regression analysis, the paper investigates what factors may help to explain increases in loan-loss provisions for the major UK banks. Explanatory variables reviewed include aggregate variables such as GDP growth as well as bank-specific factors such as the composition of the loan portfolio. The main findings are that a number of macroeconomic variables can indeed inform about banks’ provisions, in particular real GDP growth, real interest rates and lagged aggregate lending growth. Bank-specific behaviour is also important — increased lending to riskier sectors, such as commercial property companies, has generally been associated with higher provisions.

PDFThe provisioning experience of the major UK banks: a small panel investigation

Other papers

Give your feedback

Was this page useful?
Yes
No
Add your details...