A Balance Sheet Approach to Financial Crisis

Brad Setser, Nouriel Roubini, Christian Keller, Mark Allen and Christoph Rosenberg

No 2002/210, IMF Working Papers from International Monetary Fund

Abstract: The paper lays out an analytical framework for understanding crises in emerging markets based on examination of stock variables in the aggregate balance sheet of a country and the balance sheets of its main sectors (assets and liabilities). It focuses on the risks created by maturity, currency, and capital structure mismatches. This framework draws attention to the vulnerabilities created by debts among residents, particularly those denominated in foreign currency, and it helps to explain how problems in one sector can spill over into other sectors, eventually triggering an external balance of payments crisis. The paper also discusses the potential of macroeconomic policies and official intervention to mitigate the cost of such a crisis.

Keywords: WP; foreign currency; hard currency; short-term debt; debt restructuring; interest rate; National balance sheets; financial crisis; IMF policy; emerging markets; capital structure; preferred debt; currency risk; rollover crisis; nominal exchange rate; Financial statements; Currencies; Exchange rates; Global (search for similar items in EconPapers)
Pages: 63
Date: 2002-12-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (156)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=16167 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2002/210

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().