Financial Stability Paper No 24: The role of external balance sheets in the financial crisis

Yaser Al-Saffar, Wolfgang Ridinger and Simon Whitaker
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Yaser Al-Saffar: Bank of England, Postal: Publications Group Bank of England Threadneedle Street London EC2R 8AH
Wolfgang Ridinger: Bank of England, Postal: Publications Group Bank of England Threadneedle Street London EC2R 8AH
Simon Whitaker: Bank of England, Postal: Publications Group Bank of England Threadneedle Street London EC2R 8AH

No 24, Bank of England Financial Stability Papers from Bank of England

Abstract: Gross external balance sheets are important in explaining the incidence of the financial crisis across economies. Just as for banks, leverage of the national balance sheet was an indicator of subsequent vulnerability. Countries that also experienced strong domestic credit growth, in part fuelled by ‘savings glut’ net capital inflows, suffered particularly badly. And banks’ balance sheets were critical in the transmission mechanism: high gross external interbank debt — the ‘banking glut’ — and maturity and currency mismatches, contributed to foreign rollover risk.

Keywords: financial crises; external balance sheets (search for similar items in EconPapers)
JEL-codes: G01 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2015-10-25
New Economics Papers: this item is included in nep-acc and nep-ban
Note: http://www.bankofengland.co.uk/financialstability/Pages/fpc/fspapers/fs_paper24.aspx
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