The opportunities of many developing economies to borrow innovation is not readily available to us. Thus, even though the longer-term prospects for innovation and respectable U.S. productivity growth are encouraging, our productivity growth has rarely exceeded an average rate of 3 percent annually for any protracted period.
Including the impact of such sales in estimates of the loss given default (LGD) parameter automatically raises capital requirements considerably on all performing loans and consequently reduces capital ratios. Analyses based on a sample of Italian banks show that this reduction could be significant.