This paper explores the CECL standard's background, the choices community banks, regional banks, and credit unions face, and some suggested approaches for dealing with these challenges.
According to the Federal Reserve's “Financial Accounts of the United States”, first-quarter 2019's outstanding debt of U.S. nonfinancial corporations advanced by 8.1% year-over-year to a new record high of $9.926 trillion.
Using the Moody's Analytics Global Macroeconomic Model to estimate the potential impact of BRI-related investments on Southeast Asian countries.
The implied probability of a fed funds rate cut at the Federal Open Market Committee's July 31 meeting recently soared to 72% mostly in response to Jerome Powell's apparent willingness to heed the recessionary warning of a possibly persistently inverted yield curve.
Alternative economic scenarios are invaluable for quantifying and managing forecast risk. In this article, we define these constant severity scenarios and the models used to estimate their probabilities.
Since May 3, or just prior to the latest episode of trade-related stress, the market value of U.S. common stock had plunged by 5.7% as of May 29's close for a paper loss of $1.735 trillion.
Fed Chairman Jerome Powell recently addressed the issue of business borrowing. In a May 20 speech, Mr. Powell suggested that, by itself, the new record high ratio of nonfinancial-corporate business debt to GDP is much less of a risk to systemic financial liquidity than was home mortgage debt's record high 100% of disposable personal income from 2007.
According to the Federal Reserve's “Financial Stability Report” of May 2019, not only has the outstanding debt of nonfinancial businesses outpaced nominal GDP during the past 10 years (or since 2008), but the growth of debt has been skewed toward riskier firms.
The gradual disinflation in Canada's housing market continues at a steady pace.
From an accounting standpoint, the changes in how to account for credit-loss reserves within the banking, insurance, and lending industries stemming from the Financial Accounting Standards Board's (FASB) current expected credit losses (CECL) guidance are significant.
New escalation of the U.S.-China trade war makes a number of scenarios possible, including one in which the global economy suffers recession later this year.
We test the early warning power of the CreditEdge Deterioration Probability (DP) metric for Fallen Angel downgrades.
Moody's Analytics Director Robby Holditch recently visited the Barret School of Banking to discuss the upcoming current expected credit loss (CECL) accounting standard and its ramifications for the community banking space.
The Trump administration has increased tariffs to 25% on around US$200 billion of Chinese goods imports. An important determinant of the impact on the U.S. and global economies will be how Beijing chooses to retaliate.
During a week of heightened equity market volatility, the corporate credit market was relatively calm. As of May 8's close, the credit market had yet to sense much collateral damage from an intensification of the trade conflict between China and the U.S.
The now positive trend of Baa-industrial credit rating revisions is nearly diametrically opposed to the negative trend of high-yield rating changes.
Banks must invest in a data management system that can be easily updated with new regulatory and commercial realities.
A high ratio of corporate debt to GDP is tolerable as long as a material contraction of core pretax profits is avoided. History shows that the ratio of corporate debt to core pretax profits performs better at explaining high-yield defaults than does the ratio of corporate debt to GDP.
Beijing's easing measures will help temper the economic growth slowdown in 2019.
Uncertainty clouds the outlook for 2019, and risks are tilted to the downside.
The U.S. economy has weakened in early 2019, fanning concerns that the expansion is running out of steam. However, a number of factors that are contributing to this apparent downshift are temporary.
Supply chains and cross-border transactions could be damaged.
This paper studies how earnings volatility induced by credit risk can impact share price performance for financial institutions under CECL and IFRS 9, and quantifies the benefit of an active credit risk management practice.
The credit ratings distribution of outstanding U.S. high-yield corporate bond debt and the distribution of high-yield credit rating revisions now deliver conflicting messages regarding the high-yield default rate's likely direction.
América Central continuará siendo la subregión con mayor crecimiento en el 2019, dada su estrecha relación con el mercado estadounidense y los aún favorables precios de las materias primas.
The faster growth of nonfinancial-corporate debt relative to both nominal GDP and the group's core pretax profits has been offset by the comparatively slow growth of net interest expense.
Recession fears abound yet the prices of earnings-sensitive securities and industrial commodities have held up reasonably well. Indicators of financial distress have yet to warn of sharply lower share prices and a surge in corporate debt defaults. Apparently markets are confident in the remedial powers of lower interest rates.
While many institutions are currently in the throes of implementing the current expected credit loss (CECL) accounting standard, some are thinking ahead and some that are not. CECL will have an unavoidable impact on management disclosures, specifically around explaining period-over-period changes in allowance.
The Treasury bond market was stunned by the drop in the Federal Open Market Committee's “dot chart” projection for year-end 2019 fed funds' midpoint from the 2.875% of December 2018's projection to 2.375% as of March 2019's projection.
We assess the economic consequences for Latin America should the trade truce between the U.S. and China fail to hold.