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Mapping Financial Sector Vulnerability in a Non-Crisis Country

Author

Listed:
  • Ms. Inci Ötker
  • Mr. Patrick Downes
  • Mr. Dewitt D Marston

Abstract

The forward-looking framework expounded in this paper links a qualitative evaluation of system-wide vulnerability (covering macro, sectoral, institutional, and systemic liquidity issues) with a quantitative assessment of the financial condition of significant financial institutions. Based on vulnerability criteria and judgmental stress tests, twelve indicators of soundness (measuring risk exposure, solvency, liquidity, profitability, and supervisory assessment) are developed. This holistic methodology can be used not only as an early warning/crisis-avoidance system to identify potential systemic problems—and problem institutions—requiring immediate attention, but also to pinpoint needed reforms in the legal, regulatory, and institutional infrastructure that can lessen the likelihood of a future crisis.

Suggested Citation

  • Ms. Inci Ötker & Mr. Patrick Downes & Mr. Dewitt D Marston, 1999. "Mapping Financial Sector Vulnerability in a Non-Crisis Country," IMF Policy Discussion Papers 1999/004, International Monetary Fund.
  • Handle: RePEc:imf:imfpdp:1999/004
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    Citations

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    Cited by:

    1. Thierry Apoteker, 2001. "Transformation des systèmes bancaires polonais, tchèque et hongrois : subsiste-t-il des fragilités systémiques ?," Revue d'Économie Financière, Programme National Persée, vol. 6(1), pages 455-466.
    2. Gongpil Choi, 2001. "Structural changes and the scope of inflation targeting in Korea," Pacific Basin Working Paper Series 2001-05, Federal Reserve Bank of San Francisco.

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