Panama: Selected Issues

August 19, 2015

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Format: Chicago

Panama: Selected Issues, (USA: International Monetary Fund, 2015) accessed December 26, 2024

Summary

This Selected Issues paper assesses risks in the Panamanian banking sector. The analysis suggests that Panama’s banking system seems able to withstand reasonably severe shocks, while contagion risks stem primarily from foreign banks. Ample starting capital buffers and bank profitability prevent translation of higher loan defaults under stress into materially impair capital adequacy ratios. Reverse engineering the exercise to gauge what it would take to erase one-fourth of system capital reveals that the shock would need to be not only unprecedented, but also extremely large. In terms of contagion, while failures of both domestic and foreign banks would result in significant capital losses for Panamanian banks, the risk of contagion propagation is much higher in the case of the latter.

Subject: Banking, Capital adequacy requirements, Commercial banks, Energy subsidies, Expenditure, Financial institutions, Financial regulation and supervision, Foreign banks, Oil prices, Prices, Private investment, Public investment spending

Keywords: Bank lending-deposit, Capital adequacy requirements, Commercial banks, CR, Foreign banks, Global, Interest rate shock, ISCR, North America, Northern Europe, Oil price, Oil prices, Panama, Panama interest rate regression, Price, Price slump, Public investment spending, Rate

Publication Details

Pages:

64
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2015/238
Stock No:

1PANEA2015002
ISBN:

9781513550862
ISSN:

1934-7685

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