A Financial Stress Index for a Highly Dollarized Developing Country: The Case of Lebanon

Layal Mansour Ishrakieh, Leila Dagher () and Sadika El Hariri

MPRA Paper from University Library of Munich, Germany

Abstract: The aim of this paper is to construct the first comprehensive Financial Stress Index for Lebanon, dubbed the IFEFSI (Institute of Financial Economics Financial Stress Index). This is a broad coincident composite index that includes three different market segments; the banking sector, the equities market, and the foreign exchange and other markets. It is constructed as a continuous real-time measure that quantifies the level of systemic stress by measuring latent conditions. As a metric for financial conditions, the IFEFSI should provide valuable information to macroprudential regulators whose aim is to maintain a smooth and resilient financial system. By using it as a tool to help monitor, identify, and address any potential crisis, they are better equipped to maintain financial and economic stability in Lebanon.

Keywords: Financial Stress Index; Financial Crisis; Lebanon; Economic Policy (search for similar items in EconPapers)
JEL-codes: E44 E58 G01 G18 G20 (search for similar items in EconPapers)
Date: 2019
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Published in Central Bank Review 2.20(2021): pp. 43-52

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:116083

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