We examine whether equity market variables, such as stock returns and equity-based default probabilities, are useful to bank supervisors for assessing the condition of bank holding companies. Using an event study framework, we find that equity market variables anticipate supervisory ratings...

Market discipline is an article of faith among financial economists, and the use of market discipline as a regulatory tool is gaining credibility. Effective market discipline involves two distinct components: security holders' ability to accurately assess the condition of a firm ("monitoring")...

The assessment of the implementation of the Basel Core Principles (BCP) was conducted for effective banking supervision in Nigeria. The assessment team reviewed the legal framework for banking supervision and held extensive discussions with the staff of the Central Bank of Nigeria (CBN) and the...

Belgian financial conglomerates (FCs) remained important players in the Belgian financial sector, despite significant restructuring following the global financial crisis. FCs operated in multiple streams of the financial sector, especially in banking and insurance. Owing to their economic reach...

The ability of the National Bank of Belgium (NBB) to provide emergency liquidity assistance to solvent but temporarily illiquid firms is well tested and satisfactory. Belgian authorities are testing draft guidelines for recovery plans through pilot projects with selected firms that are of...

This technical note discusses key findings of the assessment of Crisis Management and Bank Resolution Framework for France. The findings reveal that the crisis preparation, crisis identification, and crisis management processes in the supervisory authority (ACP) are comprehensive and well...

The Belgian financial system is relatively large, concentrated, and interconnected and has a high level of compliance with the Basel Core Principles (BCPs) for effective banking supervision. The National Bank of Belgium (NBB) deploys high-quality supervisory practices and has clear lines of...

This staff report on United Kingdom’s (UK) 2013 Article IV Consultation highlights economic policies and development. The UK economy grew by about ¼ percent in 2012. Net trade reduced growth by 0.6 percentage points of GDP, the biggest drag since 2005, and well above staff projections....

This Financial Sector Stability Assessment on Nigeria discusses the macroeconomic performance and structure of the financial system. Although Nigerian economy experienced both domestic and external shocks in recent years, the economy continued to grow rapidly, achieving more than 7 percent...

Stress testing has recently become a critical risk management and capital planning tool for large financial institutions and their supervisors around the world. However, the one prior U.S. experience tying stress test results to capital requirements was a spectacular failure: the Office of...