Cover IMF Working Papers
Collateral in Loan Classification and Provisioning
Author:
Mr. In W Song
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Series:
IMF Working Papers
Volume/Issue:
Volume 2002: Issue 122
Language:
English
Publication Date:
01 Jul 2002
DOI:
https://doi.org/10.5089/9781451854503.001
ISBN:
9781451854503
ISSN:
1018-5941
Pages:
24
Keywords:
WP; loan; collateral value; mortgaged collateral; Banking Supervision; Loan Classification; Provisioning; Financial Regulation; loan amount; fair value; book value; loan-enforcement action; negative equity; loan review; loan decision; loan portfolio; overcollateralize loan; loan institution; Collateral; Loans; Real estate prices; Mortgages; Africa; Eastern Europe
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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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Adequate loan classification practices are an essential part of a sound and effective credit risk-management process in a bank. Failure to identify deterioration in credit quality in a timely manner can aggravate and prolong the problem. Two key issues arise with regard to the use of collateral in the context of loan classification and provisioning. In particular, the questions arise whether collateral should be taken into account in classifying a collateralized loan, and whether it should be considered in calculating provisions. This paper surveys country practices in the role of collateral in loan classification and provisioning, and suggests good practices on these issues.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2002: Issue 122