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Why is the financial system procyclical and what can be done.

Presentation for LACEA about dynamic provisions on November 2011 en Noviembre

After analyzing the different reasons why the financial system and also the regulatory framework induced procyclicality, this paper reviews the experiences of three countries which have introduced dynamic provisioning as a regulatory tool to l…

The financial crisis of 2007–08 has drawn the attention of regulators and market participants to the severe consequences of pro-cyclicality in the financial system.