Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - How well do aggregate prudential ratios identify banking system problems?
AU - Čihák, Martin
AU - Schaeck, Klaus
PY - 2010/9/1
Y1 - 2010/9/1
N2 - Aggregate prudential ratios have become a mainstay of financial stability analysis. But how reliable are these indicators when it comes to distinguishing between strong and weak banking systems? We address this issue by analyzing the performance of aggregate prudential ratios in systemic banking crises, drawing upon a large cross-country dataset. We caution against sole reliance on these indicators, and advocate supplementing them with other tools and techniques. Nonetheless, our findings offer evidence that some of the ratios can help identify systemic banking problems.
AB - Aggregate prudential ratios have become a mainstay of financial stability analysis. But how reliable are these indicators when it comes to distinguishing between strong and weak banking systems? We address this issue by analyzing the performance of aggregate prudential ratios in systemic banking crises, drawing upon a large cross-country dataset. We caution against sole reliance on these indicators, and advocate supplementing them with other tools and techniques. Nonetheless, our findings offer evidence that some of the ratios can help identify systemic banking problems.
KW - Financial soundness indicators
KW - Banking crises
KW - Macroprudential analysis
U2 - 10.1016/j.jfs.2010.03.001
DO - 10.1016/j.jfs.2010.03.001
M3 - Journal article
VL - 6
SP - 130
EP - 144
JO - Journal of Financial Stability
JF - Journal of Financial Stability
SN - 1572-3089
IS - 3
ER -