Macroeconomic Environment and Credit Risk
Year: 2007 Volume: 57 Issue: 1 -2 Pages: 60-78
Abstract: The importance of credit-risk models has increased with the introduction of the New Basel Capital Accord (Basel II). This paper follows Merton´s approach to structural analysis, toward default-rate modeling. A latent-factor model is introduced within this framework. Estimation of this model can help further our understanding of the relationship between credit risk and macroeconomic indicators. The results have been used for stress testing the Czech banking sector.
JEL classification: G21, G28, G33
Keywords: banking; credit risk; default rate; latent-factor model; stress test
RePEc: http://ideas.repec.org/a/fau/fauart/v57y2007i1-2p60-78.html
Attachment [PDF] | Print Recommend to others |