Macroeconomic and Financial Soundness Indicators: An Empirical Investigation

By Rita Babihuga. Social Science Research Network, 2007

121 citations recorded by the source corpus.

This paper analyzes the relationship between selected macroeconomic and financial soundness indicators (FSIs) using a newly assembled panel dataset of FSIs for 96 countries covering the period 1998-2005. The analysis covers key macroeconomic indicators and FSIs of capital adequacy, asset quality and profitability. The paper finds that FSIs fluctuate strongly with both the business cycle and the inflation rate. Short term interest rates and the real exchange rate also emerge as important determinants. There is also a considerable degree of heterogeneity in the relationship between macroeconomic indicators and FSIs across the sample of countries. Several country and industry specific characteristics including country income levels, financial depth, market concentration, and the quality of regulatory supervision are found to be significant in explaining this cross country heterogeneity.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/6d5990e93f51bf0be45a000a85fe2a4f3b41ba6e

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. R. Barrell
2. Neila Boulila Taktak
3. Abdelkader Boudriga
4. Philip Davis
5. D. Karim
6. S. Jellouli
7. I. Liadze

In Finance

1. R. Barrell
2. Philip Davis
3. I. Liadze
4. Neila Boulila Taktak
5. Abdelkader Boudriga
6. D. Karim
7. S. Jellouli

Citations in the corpus

• Bank regulation, property prices and early warning systems for banking crises in OECD countries (2010, result): “The suspicion that bank capital adequacy and liquidity are countercyclical (as is shown for example in Babihuga (2007)) means that measures to restrict procyclicality of the financial system are also validated by our results. There is already an approach in operation in Spain which raises capital ad”
• Corruption and bank risk-taking: Evidence from emerging economies (2015, unknown): “The cyclicality of bank riskiness has been well documented in extant literature like Demirguc-Kunt and Detragiache (1998), Babihuga (2007), and Marcucci and Quagliariello (2009).”
• Banking supervision and nonperforming loans: a cross-country analysis (2009, background): “To our knowledge, except the study by Babihuga (2007), our paper pioneers the research work investigating the determinants of NPLs at the aggregate level. We use aggregate Financial Soundness Indicators (FSI) data drawn from the IMF (2007), which provides a unique information set for 95 countries du”