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Macroprudential policy and financial stability

Author

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  • Bogdan CHIRIACESCU

    (Bucharest University of Economic Studies)

Abstract

This paper tries a conceptual framing of the issue of financial stability in economic theory and also to identify solutions to address episodes of financial instability. An essential reference is Minsky's financial instability hypothesis, which argues that a fundamental feature of the financial system is that it swings between robustness and fragility and these pendulum swings are an integral part of the process that generates the business cycle. Studies show that the effects of banking crises on economic activity are important both in magnitude and duration. Recently, macroprudential policy stood out as a central pillar in promoting financial stability in a broad sense. Regarding specific objectives of macroprudential policy, the prevalent vision refers to limiting systemic risk and macroeconomic costs of financial crises, but there are also important nuances.

Suggested Citation

  • Bogdan CHIRIACESCU, 2013. "Macroprudential policy and financial stability," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(579)), pages 81-88, February.
    • Handle: RePEc:agr:journl:v:xx:y:2013:i:2(579):p:81-88
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    Cited by:

    1. Oana Maria Stepan & Dumitru Beldiman, 2016. "European Funds: Their Impact on Romania’s Financial Stability," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 16(1), pages 265-274.

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