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Taxonomy of Chilean Financial Fragility Periods from 1975 to 2017

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  • Juan Francisco Martínez
  • José Miguel Matus
  • Daniel Oda

Abstract

The measurement of financial fragility is a key element but still an ongoing task for monetary, financial authorities and international financial institutions. This is specially relevant when applying financial policies that are contingent on the behavior of a particular economy or try to anticipate disruptive events. However, there are several dimensions that complicate the precise definition of financial fragility and the identification of these periods; some examples are: the distinction of causes, symptoms, effects and policy management measures. The current literature points out to a few key elements that have a broad impact on the financial system. In particular, it highlights the role of materialized credit risk, profits and credit activity of banks as signs of instability. In this paper, we combine these elements to identify and delimit historical financial fragility periods for the Chilean economy. In doing so, we build a novel monthly database that includes the 1980's local banking crisis period.

Suggested Citation

  • Juan Francisco Martínez & José Miguel Matus & Daniel Oda, 2018. "Taxonomy of Chilean Financial Fragility Periods from 1975 to 2017," Working Papers Central Bank of Chile 822, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:822
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    File URL: https://www.bcentral.cl/documents/33528/133326/DTBC_822.pdf
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    Cited by:

    1. Nicolás Álvarez & Antonio Fernandois & Andrés Sagner, 2021. "Economic Growth at Risk: An Application to Chile," Working Papers Central Bank of Chile 905, Central Bank of Chile.
    2. Martínez, Juan Francisco & Oda, Daniel, 2021. "Characterization of the Chilean financial cycle, early warning indicators and implications for macro-prudential policies," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 2(1).
    3. Juan Francisco Martínez & Daniel Oda & Gonzalo Marivil, 2022. "Pass-through from monetary policy to bank interest rates: A-symmetry analysis," Working Papers Central Bank of Chile 944, Central Bank of Chile.

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