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Description

The global financial crisis is creating stress on banking systems across the world through funding and asset quality shocks. This paper combines different stress scenarios, as well as cross-country analysis, to assess New Zealand bank vulnerabilities to the global crisis and the domestic recession. It finds that a sharp worsening of asset quality would be required to reduce bank capital below the regulatory minimum. On the funding side, a disruption to banks' offshore funding may put pressure on the exchange rate, but would not trigger a systemic liquidity problem.

Keywords

Bank Funding, Bank Asset Quality, Stress Tests, Banking Sector, Banks, Corporate Sector, Credit Risk, Financial Assets, Financial Soundness Indicators, Household Credit, Housing Prices, Risk Management

Taxonomy

Economic sectors, Financial crisis, International financial system, Private sector

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More publications in this series: Working Papers

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More publications by: Ray Brooks ; Rodrigo Cubero