Financial Stress, Downturns, and Recoveries
By Roberto Cardarelli, Selim Elekdag, S. Lall. Social Science Research Network, 2009
189 citations recorded by the source corpus.
This paper examines why some financial stress episodes lead to economic downturns. The paper identifies episodes of financial turmoil using a financial stress index (FSI), and proposes an analytical framework to assess the impact of financial stress - in particular banking distress - on the real economy. It concludes that financial turmoil characterized by banking distress is more likely to be associated with severe and protracted downturns than stress mainly in securities or foreign exchange markets. Economies with more arms-length financial systems appear to be particularly vulnerable to sharp contractions, due to the greater procyclicality of leverage in their banking systems.
Subfields: Economics and Econometrics, Finance
View Paper: https://www.semanticscholar.org/paper/8764bb0d801b8ad3ca77b3f4ab38f669d4ccae1b
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
- Jaromír Baxa
- Bořek Vašíček
- R. Horvath
- Irina Tytell
- Ravin Balakrishnan
- S. Danninger
- Selim Elekdag
- Ricardo M. Sousa
In Finance
- Jaromír Baxa
- Bořek Vašíček
- R. Horvath
- Irina Tytell
- Ravin Balakrishnan
- S. Danninger
- Selim Elekdag
- Ricardo M. Sousa
Citations in the corpus
- Time-varying monetary-policy rules and financial stress: Does financial instability matter for monetary policy? (2011, methodology): “IMF mimeo.”
- The Transmission of Financial Stress from Advanced to Emerging Economies (2009, background): “See also Cardarelli et al. (2009) and the IMF (2008, ch. 4).”