Monetary Aggregates and the Central Bank’s Financial Stability Mandate

Hyun Jeong Kim, Hyun Song Shin and Jacho Yun
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Hyun Jeong Kim: Bank of Korea
Jacho Yun: Ewha Womans University

International Journal of Central Banking, 2013, vol. 9, issue 1, 69-108

Abstract: Money is the balance sheet counterpart to bank lending. As such, highly procyclical components of money reflect incremental bank lending that may reverse abruptly as financial conditions deteriorate. Components of monetary aggregates that correspond to cross-border banking sector flows depend sensitively on both domestic and global financial factors and display a procyclical pattern that may be utilized in constructing a set of indicators of the vulnerability of the financial system to crises. We illustrate our arguments by drawing on the experience of Korea and by presenting an empirical analysis of crossborder banking flows into "demand-pull" and "supply-push" components.

JEL-codes: E43 E44 G21 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (15)

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