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Financial Stress, Downturns, and Recoveries Author info | Abstract | Publisher info | Download info | Related research | Statistics Selim Elekdag
Roberto Cardarelli
Subir Lall
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This paper examines why some financial stress episodes lead to economic downturns. The paper identifies episodes of financial turmoil using a financial stress index (FSI), and proposes an analytical framework to assess the impact of financial stress-in particular banking distress-on the real economy. It concludes that financial turmoil characterized by banking distress is more likely to be associated with severe and protracted downturns than stress mainly in securities or foreign exchange markets. Economies with more arms-length financial systems appear to be particularly vulnerable to sharp contractions, due to the greater procyclicality of leverage in their banking systems.
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Paper provided by International Monetary Fund in its series IMF Working Papers with number
09/100.
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Length: 58 pages
Date of creation: 13 May 2009Date of revision:
Handle: RePEc:imf:imfwpa:09/100Contact details of provider: Postal: International Monetary Fund, Washington, DC USA Phone: (202) 623-7000 Fax: (202) 623-4661 Email: Web page: http://www.imf.org/external/pubind.htm More information through EDIRC
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Keywords: Financial crisis ; Financial systems ; Banking sector ; Exchange markets ; Securities markets ; Banking crisis ; Economic recession ; Economic recovery ; Business cycles ; Cross country analysis ; Other versions of this item:
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
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