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The Global Financial Crisis and its Impact on the Chilean Banking System


  • Jorge A Chan-Lau


This paper explores how the global turmoil affected the risk of banks operating in Chile, and provides evidence that could help strengthen work on vulnerability indicators and off-site supervision. The analysis is based on the study of default risk codependence, or CoRisk, between Chilean banks and global financial institutions. The results suggest that the impact of the global financial crisis was limited, inducing at most a one-rating downgrade to banks operating in Chile. The paper concludes by assessing government measures aimed at reducing systemic risk in the domestic banking sector and the recommendations to allocate SWF assets to domestic banks.

Suggested Citation

  • Jorge A Chan-Lau, 2010. "The Global Financial Crisis and its Impact on the Chilean Banking System," IMF Working Papers 10/108, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:10/108

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    References listed on IDEAS

    1. Gropp, Reint & Vesala, Jukka & Vulpes, Giuseppe, 2006. "Equity and Bond Market Signals as Leading Indicators of Bank Fragility," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(2), pages 399-428, March.
    2. Lagunoff, Roger & Schreft, Stacey L., 2001. "A Model of Financial Fragility," Journal of Economic Theory, Elsevier, vol. 99(1-2), pages 220-264, July.
    3. Arnaud Jobert & Janet Kong & Jorge A Chan-Lau, 2004. "An Option-Based Approach to Bank Vulnerabilities in Emerging Markets," IMF Working Papers 04/33, International Monetary Fund.
    4. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, March.
    5. Rodrigo Cifuentes & Hyun Song Shin & Gianluigi Ferrucci, 2005. "Liquidity Risk and Contagion," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 556-566, 04/05.
    6. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    7. Maria Vassalou & Yuhang Xing, 2004. "Default Risk in Equity Returns," Journal of Finance, American Finance Association, vol. 59(2), pages 831-868, April.
    8. Jorge A. Chan-Lau, 2008. "The globalisation of finance and its implications for financial stability: an overview of the issues," International Journal of Banking, Accounting and Finance, Inderscience Enterprises Ltd, vol. 1(1), pages 3-29.
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    Cited by:

    1. Rodolfo Maino & Kalin I Tintchev, 2012. "From Stress to Costress; Stress Testing Interconnected Banking Systems," IMF Working Papers 12/53, International Monetary Fund.
    2. Papanikolaou, Nikolaos I. & Wolff, Christian C.P., 2014. "The role of on- and off-balance-sheet leverage of banks in the late 2000s crisis," Journal of Financial Stability, Elsevier, vol. 14(C), pages 3-22.
    3. Fuad Aleskerov & Irina Andrievskaya & Elena Permjakova, 2014. "Key Borrowers Detected By The Intensities Of Their Short-range Interactions," HSE Working papers WP BRP 33/FE/2014, National Research University Higher School of Economics.
    4. Jorge A Chan-Lau, 2010. "Balance Sheet Network Analysis of Too-Connected-to-Fail Risk in Global and Domestic Banking Systems," IMF Working Papers 10/107, International Monetary Fund.
    5. Rodrigo A. Alfaro. & AndrĂ©s Sagner & Carmen G. Silva, 2011. "Aplicaciones del Modelo Binomial para el AnĂ¡lisis de Riesgo," Working Papers Central Bank of Chile 631, Central Bank of Chile.


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