 Identifying imbalances in the Hungarian banking system (‘early warning’ system)Dániel Holló ()
MNB Bulletin (discontinued), 2012, vol. 7, issue 3, 38-45 Abstract: The new Hungarian Central Bank Act passed at the end of 2011 delegated macroprudential regulatory powers to the MNB. The essential elements of an effective macro-prudential policy are analytical tools which make it possible to quantify the effects arriving via different systemic risk channels and regulatory instruments which can help in the management of systemic risks. Among the four analytical tools tuned to identify and measure systemic risk (‘early warning’ system, stress tests, contagion models and a system-wide financial stress indicator) two are already in regular use at the MNB (stress tests and the system-wide financial stress indicator), a contagion model is currently under development and the ‘early warning’ system is about to be introduced. This article presents one of the four tools discussed above: the ‘early warning’ system. The ‘early warning’ system may help in the identification of periods characterised by excessive credit growth and the accumulation of critical imbalances on the banking sector’s assets and liabilities side as a result of excessive bank lending (excessive credit growth channel of systemic risk), and may serve as a point of reference for the timing of the introduction of measures named in the new MNB Act to reduce systemic risk (e.g. anti-cyclical capital buffer and other regulatory instruments designed to prevent excessive credit growth). Our results show that excessive imbalances on the asset and liability sides of the Hungarian banking system started to emerge in 2005 Q4; the current problems facing Hungarian banks stem from the large imbalances on the assets and liabilities side (excessive credit growth and significant increase in the share of non-core or secondary liabilities within total liabilities), which characterised the period between 2005 Q4 and 2008 Q4. Keywords: ‘early warning’ system; macroprudential policy; systemic risk. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:mnb:bullet:v:7:y:2012:i:3:p:38-45 Access Statistics for this article More articles in MNB Bulletin (discontinued) from Magyar Nemzeti Bank (Central Bank of Hungary) Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.