Can Financial Soundness Indicators Help Predict Financial Sector Distress?

Marcin Pietrzak

No 2021/197, IMF Working Papers from International Monetary Fund

Abstract: This paper shows how the role of Financial Soundness Indicators (FSIs) in financial surveillance can be usefully enhanced. Drawing from different statistical techniques, the paper illustrates that FSIs generate signals that can accurately detect, with 4 to 12 quarters lead, emerging financial distress—as measured by tight financial conditions.

Keywords: LV crises dataset; ROC curve; LD crises dataset; tight financial conditions; LV crisis; Financial soundness indicators; Capital adequacy requirements; Banking crises; Early warning systems; Global (search for similar items in EconPapers)
Pages: 55
Date: 2021-07-23
New Economics Papers: this item is included in nep-cwa and nep-fdg
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Citations: View citations in EconPapers (5)

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