An Incentive Approach to Identifying Financial System Vulnerabilities

Jingqing Chai and R. Johnston

No 2000/211, IMF Working Papers from International Monetary Fund

Abstract: This paper underscores the importance of the assessment of incentives of the main agents in a financial system as a key element in the analysis of financial system vulnerability and the surveillance over the financial system. We outline a diagnostic approach for the assessment of incentives. This approach highlights the need for additional research on the relationship between institutional structures and financial vulnerabilities.

Keywords: WP; bank; financial system; adverse selection; market; borrower; asymmetric information; market structure; incentive assessments; adverse selection problem; core operation; loan portfolio; financial system vulnerability; incentive assessment; bank closure; depositors of bank; market discipline; banks' behavior; banks' loan portfolio; risk borrower; Moral hazard; Financial sector risk; Legal support in revenue administration; Asia and Pacific (search for similar items in EconPapers)
Pages: 20
Date: 2000-12-01
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Citations: View citations in EconPapers (5)

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