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Credit risk

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Capital injections, bail-outs, interest rate cuts and quantitative easing. Governments have pulled out the stops to resolve the financial crisis and prop up the crisis-torn banking sector. But the problem assets - now relabelled 'legacy assets' by the US Treasury secretary, Timothy Geithner - have been the albatross round the neck of the financial system.

It has long been clear banks need to clear

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The wild world of credit models

The Covid-19 pandemic has induced a kind of schizophrenia in loan-loss models. When the pandemic hit, banks overprovisioned for credit losses on the assumption that the economy would head south. But when government stimulus packages put wads of cash in…

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