News Category
News
Challenges in Economic Capital Modeling
Date: 6-23-2010 Author: Lopez, Jose A.
Visits: 195
Financial institutions are increasingly using economic capital models to help determine the amount of capital they need to absorb unexpected losses. These models typically aggregate capital based on business-level analysis. However, important challenges surround this aggregation as well as other aspects of these models. Supervisors could use these capital calculations when they assess capital adequacy, but they need to be aware of these modeling issues.

