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Measuring Stress and Risks to the Financial System in Israel on a Radar Chart

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  • Hanan Zalkinder

    (Bank of Israel)

Abstract

The recent financial crisis has focused attention on the need for better measures and conceptual indicators of financial stress that can help identify vulnerabilities and imbalances that may threaten the stability of the financial system. This paper develops for Israel an intuitive and informative way to summarize and display the large amount of data relating to financial stress in Israel. The methodology, known as a Radar Chart, is used widely in the financial stability literature. It consists of a method for constructing indices of internal and external risks to the financial system and a graphic approach for displaying these key indices. Our contention is that our approach provides an intuitive starting point for policymaking discussions, and allows policymakers to better assess the current condition of the financial system. Our findings successfully capture the dynamics and developments of stress in the financial system in Israel from 1998 onward. We reinforce our results by performing an outof-sample test showing that our results do not depend on ex post observations.

Suggested Citation

  • Hanan Zalkinder, 2012. "Measuring Stress and Risks to the Financial System in Israel on a Radar Chart," Bank of Israel Working Papers 2012.15, Bank of Israel.
    • Handle: RePEc:boi:wpaper:2012.15
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    File URL: https://boiwebrepec.azurefd.net/RePEc/boi/wpaper/WP_2012.15.pdf
    File Function: First version, 2012
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    Cited by:

    1. Meital Graham-Rozen & Noam Michelson, 2020. "Credit Insurance In Israel: An Initial Overview And Analysis Of Considerations Affecting The Acceptance Rate," Israel Economic Review, Bank of Israel, vol. 18(1), pages 177-214.
    2. Meital Graham-Rozen & Noam Michelson, 2018. "To Accept or Not to Accept? Considerations in Providing Credit Insurance," Bank of Israel Working Papers 2018.03, Bank of Israel.

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