Monitoring Macro-Financial Vulnerability: A Primer

doi:10.1596/24937

Publication:
Monitoring Macro-Financial Vulnerability: A Primer

dc.contributor.author	Ghosh, Swati R.
dc.date.accessioned	2016-08-25T17:12:16Z
dc.date.available	2016-08-25T17:12:16Z
dc.date.issued	2016-06-01
dc.description.abstract	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.	en
dc.identifier	http://documents.worldbank.org/curated/en/2016/07/26577963/monitoring-macro-financial-vulnerability-primer
dc.identifier.doi	10.1596/24937
dc.identifier.uri	https://hdl.handle.net/10986/24937
dc.language	English
dc.language.iso	en_US
dc.publisher	World Bank, Washington, DC
dc.relation.ispartofseries	MFM Discussion Paper;No. 14
dc.rights	CC BY 3.0 IGO
dc.rights.holder	World Bank
dc.rights.uri	http://creativecommons.org/licenses/by/3.0/igo/
dc.subject	economic growth
dc.subject	volatility
dc.subject	business cycles
dc.subject	economic shocks
dc.title	Monitoring Macro-Financial Vulnerability	en
dc.title.subtitle	A Primer	en
dc.type	Working Paper	en
dc.type	Document de travail	fr
dc.type	Documento de trabajo	es
dspace.entity.type	Publication
okr.crossref.title	Monitoring Macro-Financial Vulnerability
okr.date.disclosure	2016-07-18
okr.doctype	Publications & Research
okr.doctype	Publications & Research::Working Paper
okr.docurl	http://documents.worldbank.org/curated/en/2016/07/26577963/monitoring-macro-financial-vulnerability-primer
okr.guid	143791468845194972
okr.identifier.doi	10.1596/24937
okr.identifier.externaldocumentum	090224b084465f0d_1_0
okr.identifier.internaldocumentum	26577963
okr.identifier.report	106857
okr.imported	true
okr.language.supported	en
okr.pdfurl	http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2016/07/18/090224b084465f0d/1_0/Rendered/PDF/Monitoring0mac0erability000a0primer.pdf	en
okr.topic	Macroeconomics and Economic Growth::Business Cycles and Stabilization Policies
okr.topic	Macroeconomics and Economic Growth::Economic Conditions and Volatility
okr.topic	Macroeconomics and Economic Growth::Economic Modeling and Statistics
okr.topic	Macroeconomics and Economic Growth::Macroeconomic Management
okr.unit	Macro & Fiscal Mgmt - GP (GMFDR)