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Risk Diversification in the Credit Portfolio: An Overview of Country Practices
Author:
Ms. JoAnne Morris null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2001: Issue 200
Language:
English
Publication Date:
01 Dec 2001
DOI:
https://doi.org/10.5089/9781451860160.001
ISBN:
9781451860160
ISSN:
1018-5941
Pages:
51
Keywords:
WP; equity capital; capital base; central bank; parent company; risk weight
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper reviews the rules in place in selected countries to limit risk concentrations in the credit portfolio. The paper focuses on a number of issues suggested by international organizations for countries and bank supervisors to consider in imposing standards for risk diversification in the credit portfolio. The issues reviewed for each country are the large exposure limits, the definition of credit exposure (including application on a consolidated basis), and the definition of a group of related borrowers. The paper concludes that most of the countries reviewed set limits on large exposures for banks and define a related group of borrowers in line with recommended international standards. The major differences identified among countries include how to determine the credit exposure, the application of the exposure limits on a consolidated basis, and whether to impose limits on exposure to a specific sector.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund