Procyclicality and Profit: Difference between pages

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imported>Doug Williamson
(Create page. Sources: linked pages and BIS Review 94/2009)
 
imported>Doug Williamson
(Layout.)
 
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''Bank supervision - capital adequacy - leverage.''
1.  


The tendency of financial systems to amplify fluctuations in the economic cycle.
''Accounting.''


A surplus arising from the appropriate matching of revenues with expenditure.
<br>For example, operating profit or net profit.


:<span style="color:#4B0082">'''''Interaction and amplification'''''</span>


:"Herd behaviour has long been known to be an essential feature of financial markets.
2.
 
:More subtly, individual reactions, by themselves rational, can, by the virtue of their mutual interaction, produce strong amplification effects.
 
 
:A broader definition of procyclicality would thus encompass three components, which cannot easily be distinguished in real life:
 
::(1) fluctuations around the trend
 
::(2) changes in the trend itself and
 
::(3) possible cumulative deviations from equilibrium value.
 
 
:This points to the policy challenges regulators face.
 
:They have to try and identify when pure cyclical fluctuations morph into something different: either a change in the trend itself or the start of a cumulative process."
 
 
:''Jean-Pierre Landau, Deputy Governor of the Bank of France, BIS Review 94/2009.''


More generally any surplus, gain or net benefit arising.




== See also ==
== See also ==
* [[Capital adequacy]]
*[[Attributable profit]]
* [[Countercyclical]]
*[[Business]]
* [[Cyclical]]
*[[Gross profit]]
* [[Herd behaviour]]
*[[Loss]]
* [[Leverage]]
*[[Net profit]]
* [[Procyclical]]
*[[Net profit margin]]
* [[Prudential]]
*[[Not-for-profit]]
* [[Total Loss Absorbing Capacity]]
*[[Operating profit]]
 
*[[Profit and Loss account]]
[[Category:Accounting,_tax_and_regulation]]
*[[Profit and Loss reserve]]
[[Category:The_business_context]]
*[[Profit margin]]
[[Category:Investment]]
*[[Profit maximisation]]
[[Category:Long_term_funding]]
*[[Profitability]]
[[Category:Identify_and_assess_risks]]
*[[Unrealised profit]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Financial_products_and_markets]]

Revision as of 12:18, 11 May 2016

1.

Accounting.

A surplus arising from the appropriate matching of revenues with expenditure.
For example, operating profit or net profit.


2.

More generally any surplus, gain or net benefit arising.


See also