Taxonomy of Chilean Financial Fragility Periods from 1975 to 2017

Juan Francisco Martínez, José Miguel Matus and Daniel Oda

Working Papers Central Bank of Chile from Central Bank of Chile

Abstract: The measurement of financial fragility is a key element but still an ongoing task for monetary, financial authorities and international financial institutions. This is specially relevant when applying financial policies that are contingent on the behavior of a particular economy or try to anticipate disruptive events. However, there are several dimensions that complicate the precise definition of financial fragility and the identification of these periods; some examples are: the distinction of causes, symptoms, effects and policy management measures. The current literature points out to a few key elements that have a broad impact on the financial system. In particular, it highlights the role of materialized credit risk, profits and credit activity of banks as signs of instability. In this paper, we combine these elements to identify and delimit historical financial fragility periods for the Chilean economy. In doing so, we build a novel monthly database that includes the 1980's local banking crisis period.

Date: 2018-06
New Economics Papers: this item is included in nep-his, nep-pke and nep-rmg
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Persistent link: https://EconPapers.repec.org/RePEc:chb:bcchwp:822

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