In this video we explain the Basel concept of Expected Losses (EL). We calculate these expected losses using the Exposure At Default (EAD), Probability of Default (PD) and Loss Given Default (LGD). We also demonstrate the difference between Expected Losses (EL) and Unexpected Losses (UL). Once the size of the Expected Losses (EL) is known, the bank can determine the level of loan loss provisioning. In a separate video we will cover the Unexpected Losses (EL) and Economic Capital (ECAP). The video includes an Excel model and example.

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André Koch Stachanov Solutions & Services

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Excel,Stachanov,Stachanov Solutions & Services,André Koch,,Financial Modelling,Basel,Basel accord,Loan Loss provisioning,Expected Losses,Unexpected losses,Exposure at Default,EL,UL,EAD,LGD,Loss Given Default,PD,Economic Capital,Probability of Default,Banking course;credit risk,excel model,provisions, loan loss reserves, capital cushion,LLP,ECAP,capital needs,bank regulation,economic capital,regulatory capital

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