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Indicator and boundaries of financial stability


  • Jan Willem van den End


This paper presents an information variable for financial stability consisting of a composite index and its related critical boundaries. It is an extension of a Financial Conditions Index with information on financial institutions. The indicator is bounded, on one side, by the instability boundary which depends on the solvency buffers of the institutions and the stress level on financial markets. On the other side, the imbalances boundary signals when extreme imbalances accumulate. This concept is applied to the Netherlands and six OECD countries which experienced a financial crisis.

Suggested Citation

  • Jan Willem van den End, 2006. "Indicator and boundaries of financial stability," DNB Working Papers 097, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:dnbwpp:097

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    References listed on IDEAS

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    Cited by:

    1. Petr Jakubík & Tomáš Slacík, 2013. "Measuring Financial (In)Stability in Emerging Europe: A New Index-Based Approach," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 25, pages 102-117.
    2. Campbell, Gareth & Coyle, Christopher & Turner, John D., 2016. "This time is different: Causes and consequences of British banking instability over the long run," Journal of Financial Stability, Elsevier, vol. 27(C), pages 74-94.
    3. Mirna Dumičić, 2015. "Financial Stability Indicators – the Case of Croatia," Working Papers 43, The Croatian National Bank, Croatia.
    4. Derek Anderson & Benjamin L Hunt & Stephen Snudden, 2013. "Fiscal Consolidation in the Euro Area; How Much Can Structural Reforms Ease the Pain?," IMF Working Papers 13/211, International Monetary Fund.
    5. repec:fau:fauart:v:67:y:2017:i:6:p:492-511 is not listed on IDEAS
    6. Jaume Puig & Ken Miyajima & Rebecca McCaughrin & Peter Dattels, 2010. "Can You Map Global Financial Stability?," IMF Working Papers 10/145, International Monetary Fund.
    7. Apostolakis, George & Papadopoulos, Athanasios P., 2014. "Financial stress spillovers in advanced economies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 32(C), pages 128-149.
    8. Adriana Soares Sales & Waldyr D. Areosa & Marta B. M. Areosa, 2012. "Some Financial Stability Indicators for Brazil," Working Papers Series 287, Central Bank of Brazil, Research Department.
    9. Claudiu Tiberiu Albulescu, 2009. "Forecasting Romanian Financial System Stability using a Stochastic Simulation Model," Working Papers 2009.4, International Network for Economic Research - INFER.
    10. Tao Sun, 2015. "The Impact of Global Liquidity on Financial Landscapes and Risks in the ASEAN-5 Countries," IMF Working Papers 15/211, International Monetary Fund.
    11. Albulescu, Claudiu Tiberiu, 2010. "Forecasting The Romanian Financial System Stability Using A Stochastic Simulation Model," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 81-98, March.

    More about this item


    financial stability; indicator; crisis;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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