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Essays on Financial Stability

Author

Listed:
  • John Chant
  • Alexandra Lai
  • Mark Illing
  • Fred Daniel

Abstract

The four essays published here provide a useful overview for anyone interested in understanding the issues and policy environment surrounding financial system stability. The first three essays consider different aspects of the question, What is financial stability/instability? The first essay, by John Chant, Special Adviser at the Bank in 2001–02, considers how financial instability differs from other kinds of instability, how it is different from the volatility normally associated with a well-functioning financial system, and how instability can be propagated within the financial system and to the real economy. In the second essay, Alexandra Lai tackles some of the problems raised by Chant; in particular, the difficulty of understanding the nature of crises. She reviews a range of theoretical approaches that have been pursued in order to understand the potential instabilities in domestic financial systems. In his essay, Mark Illing provides four case studies of episodes often thought of as periods of financial stress or crisis—the stock market crash of October 1987, the near-collapse of Long-Term Capital Management in 1998, the failures of the Canadian Commercial Bank and the Northland Bank in 1985, and the Bank of New York’s 1985 computer problem. The fourth essay, by Fred Daniel, provides a context for more general discussions of the role of policy in promoting financial stability, by providing an overview of the current institutional arrangements that condition financial behaviour in Canada and how the Bank of Canada interacts with other agencies who share responsibility for financial stability.

Suggested Citation

  • John Chant & Alexandra Lai & Mark Illing & Fred Daniel, 2003. "Essays on Financial Stability," Technical Reports 95, Bank of Canada.
    • Handle: RePEc:bca:bocatr:95
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    File URL: https://www.bankofcanada.ca/wp-content/uploads/2010/01/tr95.pdf
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    References listed on IDEAS

    as
    1. Andy Haldane & Mark Kruger, 2002. "The Resolution of International Financial Crises: Private Finance and Public Funds," Bank of Canada Review, Bank of Canada, vol. 2001(Winter), pages 3-13.
    2. Jeff Powell, 2012. "International finance," Chapters, in: Jan Toporowski & Jo Michell (ed.), Handbook of Critical Issues in Finance, chapter 24, pages i-ii, Edward Elgar Publishing.
    3. James Powell, 2001. "Reforming the International Financial System," Bank of Canada Review, Bank of Canada, vol. 2001(Spring), pages 7-18.
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    Cited by:

    1. Zariņa Ilze & Voronova Irina & Pettere Gaida, 2018. "Assessment of the Stability of Insurance Companies: The Case of Baltic Non-Life Insurance Market," Economics and Business, Sciendo, vol. 32(1), pages 102-111, May.
    2. Malgorzata Mikita, 2022. "The Interrelationship Among Efficiency and Concentration of Banking System and its Stability: Evidence from Poland," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 670-689.
    3. CRISTE, Adina, 2014. "Reference Points For Financial Instability In The Euro Zone Candidates Countries," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 18(3), pages 58-75.
    4. Michał Buszko & Witold Orzeszko & Marcin Stawarz, 2021. "COVID-19 pandemic and stability of stock market—A sectoral approach," PLOS ONE, Public Library of Science, vol. 16(5), pages 1-26, May.
    5. International Monetary Fund, 2004. "Toward a Framework for Safeguarding Financial Stability," IMF Working Papers 2004/101, International Monetary Fund.
    6. Garry J. Schinasi, 2011. "Defining Financial Stability and Establishing a Framework to Safeguard It," Central Banking, Analysis, and Economic Policies Book Series, in: Rodrigo Alfaro (ed.),Financial Stability, Monetary Policy, and Central Banking, edition 1, volume 15, chapter 3, pages 029-062, Central Bank of Chile.
    7. repec:wsr:wpaper:y:2015:i:145 is not listed on IDEAS
    8. Kremen Viktoriia & Shkolnyk Inna & Semenog Andrii & Kremen Olha, 2019. "Evaluating the Relationship Between Financial Sustainability and Socio-Economic Development of Countries," Central European Economic Journal, Sciendo, vol. 6(53), pages 25-38, January.
    9. Garry J. Schinasi, 2009. "Defining Financial Stability and a Framework for Safeguarding It," Working Papers Central Bank of Chile 550, Central Bank of Chile.
    10. Mr. Udaibir S Das & Mr. Marc G Quintyn & Miss Kina Chenard, 2004. "Does Regulatory Governance Matter for Financial System Stability? An Empirical Analysis," IMF Working Papers 2004/089, International Monetary Fund.

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    More about this item

    Keywords

    Financial institutions; Financial markets;

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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