Monitoring Macro-Financial Vulnerability : A Primer
Linkages between the real and financial sectors in an economy can lead to a buildup of balance sheet mismatches of key entities—corporates, financial institutions, households, and the public sector. Once such imbalances have built up, they can make...
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World Bank, Washington, DC
2016
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| Online Access: | http://documents.worldbank.org/curated/en/2016/07/26577963/monitoring-macro-financial-vulnerability-primer http://hdl.handle.net/10986/24937 |
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okr-10986-249372021-05-25T08:50:40Z Monitoring Macro-Financial Vulnerability : A Primer Ghosh, Swati R. economic growth volatility business cycles economic shocks Linkages between the real and financial sectors in an economy can lead to a buildup of balance sheet mismatches of key entities—corporates, financial institutions, households, and the public sector. Once such imbalances have built up, they can make the economy vulnerable to macroeconomic shocks, whether external or domestic in origin. This paper discusses the key mismatches that can make entities vulnerable to shocks and how such vulnerability can build up during the business cycle. Against this backdrop, the paper then discusses a framework and potential indicators that may be useful to monitor such developments. These indicators are being developed as part of the MFM macro-financial monitoring effort. The paper is organized as follows. Section two provides a brief discussion of the risks associated with these different balance sheet mismatches. Section three discusses how positive shocks in the real sector—such as an upturn in domestic business cycles (which in turn are often instigated or accompanied by external developments such as capital inflows)—can interact with the financial sector and lead to a build-up of balance sheet mismatches. Section four then describes how, once such vulnerability has been built up, a negative shock can lead to a downward spiral of credit contraction and economic downturns. Finally, section five discusses a possible set of indicators for measuring the buildup of vulnerability. 2016-08-25T17:12:16Z 2016-08-25T17:12:16Z 2016-06-01 Working Paper http://documents.worldbank.org/curated/en/2016/07/26577963/monitoring-macro-financial-vulnerability-primer http://hdl.handle.net/10986/24937 English en_US MFM Discussion Paper;No. 14 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Working Paper |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
economic growth volatility business cycles economic shocks |
| spellingShingle |
economic growth volatility business cycles economic shocks Ghosh, Swati R. Monitoring Macro-Financial Vulnerability : A Primer |
| relation |
MFM Discussion Paper;No. 14 |
| description |
Linkages between the real and financial
sectors in an economy can lead to a buildup of balance sheet
mismatches of key entities—corporates, financial
institutions, households, and the public sector. Once such
imbalances have built up, they can make the economy
vulnerable to macroeconomic shocks, whether external or
domestic in origin. This paper discusses the key mismatches
that can make entities vulnerable to shocks and how such
vulnerability can build up during the business cycle.
Against this backdrop, the paper then discusses a framework
and potential indicators that may be useful to monitor such
developments. These indicators are being developed as part
of the MFM macro-financial monitoring effort. The paper is
organized as follows. Section two provides a brief
discussion of the risks associated with these different
balance sheet mismatches. Section three discusses how
positive shocks in the real sector—such as an upturn in
domestic business cycles (which in turn are often instigated
or accompanied by external developments such as capital
inflows)—can interact with the financial sector and lead to
a build-up of balance sheet mismatches. Section four then
describes how, once such vulnerability has been built up, a
negative shock can lead to a downward spiral of credit
contraction and economic downturns. Finally, section five
discusses a possible set of indicators for measuring the
buildup of vulnerability. |
| format |
Working Paper |
| author |
Ghosh, Swati R. |
| author_facet |
Ghosh, Swati R. |
| author_sort |
Ghosh, Swati R. |
| title |
Monitoring Macro-Financial Vulnerability : A Primer |
| title_short |
Monitoring Macro-Financial Vulnerability : A Primer |
| title_full |
Monitoring Macro-Financial Vulnerability : A Primer |
| title_fullStr |
Monitoring Macro-Financial Vulnerability : A Primer |
| title_full_unstemmed |
Monitoring Macro-Financial Vulnerability : A Primer |
| title_sort |
monitoring macro-financial vulnerability : a primer |
| publisher |
World Bank, Washington, DC |
| publishDate |
2016 |
| url |
http://documents.worldbank.org/curated/en/2016/07/26577963/monitoring-macro-financial-vulnerability-primer http://hdl.handle.net/10986/24937 |
| _version_ |
1764457947646132224 |