Advanced Search
MyIDEAS: Login to save this paper or follow this series

On Endogenous Risk, the Amplification Effects of Financial Systems and Macro Prudential Policies

Contents:

Author Info

  • Giovanni Majnoni
  • Andrew Powell
Registered author(s):

    Abstract

    The recent global financial crisis has put the spotlight on macro-prudential policies to protect firms and households from problems emanating from the financial sector. This paper proposes an analytical framework that combines exogenous and endogenous risks, the latter seen as stemming from frictions in financial markets. Arguing that endogenous risks may be systemic and costly, the paper employs a database of emerging market corporate bond spreads and finds evidence that endogenous risks are present and have amplified the effects of financial crises. Larger financial systems are found to exacerbate the impact of crises, and weaker financial systems are found to exacerbate particularly the impact of banking crises. The results suggest that policymakers should monitor time-varying systemic risks using both price and quantity signals and take actions in good times to mitigate potential amplifying effects at times of stress.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.iadb.org/document.cfm?pubDetail=1&id=36520073
    Download Restriction: no

    Bibliographic Info

    Paper provided by Inter-American Development Bank in its series IDB Publications with number 58618.

    as in new window
    Length:
    Date of creation: Nov 2011
    Date of revision:
    Handle: RePEc:idb:brikps:58618

    Contact details of provider:
    Postal: 1300 New York Avenue, NW, Washington, DC 20577
    Phone: 202-623-1000
    Email:
    Web page: http://www.iadb.org/publications/
    More information through EDIRC

    Related research

    Keywords: Financial Risk; Financial Crises & Economic Stabilization; Fiscal Policy; Monetary Policy; IDB-WP-276; Macro-prudential policies; Financial crises; Systemic risk; Financial Risk Management; economic policy;

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. repec:cge:warwcg:78 is not listed on IDEAS

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:idb:brikps:58618. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Monica Bazan).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.