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Measuring Provisions for Collateralized Retail Lending

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The Banking Sector in Hong Kong

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Abstract

While banks have faced difficulties over the years for a multitude of reasons, the major cause of serious banking problems continues to be related directly to lax credit standards for borrowers, poor portfolio risk management, or a lack of attention to changes in economic or other circumstances that can lead to a deterioration in the credit standing of a bank’s counterparties. In view of this experience, the Basel Committee on Banking Supervision (2000) sets out the sound practices which specifically address establishing an appropriate credit risk environment and maintaining an appropriate credit administration, measurement and monitoring process. These practices should also be applied in conjunction with a system in place for determining the adequacy of provisions.

Reprinted with permission from Elsevier Limited; C. H. Hui, C. F. Lo, T. C. Wong and P. K. Man, ‘Measuring Provisions for Collateralised Retail Lending’, Journal of Economics and Business, vol. 58 (2006).

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Authors
  1. Cho-Hoi Hui
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  2. Chi-Fai Lo
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  3. Eric Tak-Chuen Wong
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  4. Po-Kong Man
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Editor information

Editors and Affiliations

  1. Research Department, Hong Kong Monetary Authority, China

    Hans Genberg (Executive Director) (Executive Director)

  2. Market Research Division of Research Department, Hong Kong Monetary Authority, China

    Cho-Hoi Hui (Head) (Head)

Copyright information

© 2008 Cho-Hoi Hui, Chi-Fai Lo, Eric Tak-Chuen Wong and Po-Kong Man

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Hui, CH., Lo, CF., Wong, E.TC., Man, PK. (2008). Measuring Provisions for Collateralized Retail Lending. In: Genberg, H., Hui, CH. (eds) The Banking Sector in Hong Kong. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, London. https://doi.org/10.1057/9780230227378_10

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