Credit Losses in Australasian banking

Published: 2009

Authors: Kurt Hess , Arthur Grimes, Mark J Holmes

We analyse the determinants of bank credit losses in Australasia. Despite sizeable credit losses over the past two decades, ours is the first systematic study to do so. Analysis is based on a comprehensive dataset retrieved from original financial reports of 32 Australasian banks (1980-2005).

Credit losses rise when the macro economy is weak. Asset markets, particularly the equity market, are also important. Larger banks provide more for credit losses while banks with high cost-income-ratios show greater loan loss provisions. Strong loan growth translates into significantly higher credit losses with a lag of 2-4 years. Finally, the results show strong evidence of income smoothing activities by banks.

CAUTION: This article may be pay-walled.

Citation

Hess, Kurt, Grimes, Arthur and Holmes, Mark J. 2009. "Credit Losses in Australasian Banking," Economic Record 85:3, pp. 331-343. 

This topic in other formats

Working Paper

Credit Losses in Australasian Banking (2008)

See also

banking