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Unused loan loss reserves represent an overestimation of the bad loans on the books. Ultimately, the unused loan loss reserves would be taken into income

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Unused loan loss reserves represent an overestimation of the bad loans on the books. Ultimately, the unused loan loss reserves would be taken into income

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On the high side 15 bips of the loan amount should be set aside for loan loss reserves.

example a $100,000. loan amount $150.00 should be set aside for the llr.

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Giovanni Majnoni has written:

'The dynamics of foreign bank ownership' -- subject(s): Banks and banking, Foreign Investments, Privatization

'Bank capital and loan loss reserves under basel ii' -- subject(s): Bank reserves, Loan loss reserves

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loan loss reserve: loans are going to default so banks use part of provision to book reserve.

loan loss provisions: percertage of gross loans that all banks have to keep in their balance sheet as regulated

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They dont loan out their excess reserves. They only have excess reserves because

they dont have loan demand from qualified borrowers and the marginal return from

an average loan is greater than the interest paid on the excess reserves. IE they have to receive a marginal return of X amount above .25% they now receive on their

excess reserves from a borrower SO

1. They have to loan demand

2. Qualified borrower

3. Net marginal return of higher than the amount of interest they receive on their reserves.

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