Access and risk - friends or foes? Lessons from Chile

Osvaldo Adasme, Giovanni Majnoni and Myriam Uribe

No 4003, Policy Research Working Paper Series from The World Bank

Abstract: This paper documents the link between risk, stability, and access to credit markets in an emerging economy. It presents annual credit loss distributions of Chilean banks for the period 1999-2005, providing the first empirical evidence of the cyclical pattern of expected losses and unexpected losses of bank loan portfolios in emerging countries. The paper provides three main contributions to the debate on bank solvency and access to credit markets. First, it derives nonparametric estimators of expected losses and unexpected losses, free from model error and, in particular, from distributional restrictions. Second, it shows how the distribution of credit losses for portfolios of retail and commercial loans is affected by the lumpiness of bank loans. Finally, it shows that the shape of credit loss distributions helps select appropriate policies to promote broader and sounder access to bank credit for the poor and the unbanked.

Keywords: Banks&Banking Reform; Investment and Investment Climate; Financial Intermediation; Economic Theory&Research; Insurance&Risk Mitigation (search for similar items in EconPapers)
Date: 2006-09-01
New Economics Papers: this item is included in nep-ban, nep-fin, nep-fmk and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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