Chapter 30

Dynamic Provisioning to Reduce Procyclicality in Spain

S. Fernández de Lis* and A. Garcia-Herrero†

*BBVA, Madrid, Spain

†BBVA, Hong Kong, Hong Kong, SAR, China

Outline

Introduction

The Housing Boom and Bust in Spain

The Introduction of Dynamic Provisions in Spain

How Was the System Expected to Work?

How Did the System Work?

Measures Introduced During the Crisis

Comparison with Other Countries: Peru and Colombia

Conclusions

Glossary

Further Reading

After analyzing the different reasons why the financial system and also the regulatory framework induced procyclicality, this chapter reviews the experiences of three countries that have introduced dynamic provisioning as a regulatory tool to limit procyclicality. The case of Spain – the ...

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