## Managing Non-Core Liabilities and Leverage of the Banking System: A Building Block for Macroprudential Policy Making in Korea

_IMF Working Papers, January 1, 2012_

## Source details

**Canonical URL:** [Managing Non-Core Liabilities and Leverage of the Banking System: A Building Block for Macroprudential Policy Making in Korea](https://www.imf.org/en/publications/wp/issues/2016/12/31/managing-non-core-liabilities-and-leverage-of-the-banking-system-a-building-block-for-25671)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/31/managing-non-core-liabilities-and-leverage-of-the-banking-system-a-building-block-for-25671/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/31/managing-non-core-liabilities-and-leverage-of-the-banking-system-a-building-block-for-25671/index.json)
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## Bibliographic details
- Authors: Ali Alichi, Cheol Hong, Sang Chul Ryoo
- Published: January 1, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781463932541.001

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### Summary
- Korea has been active in implementing targeted macroprudential policies to address specific financial stability concerns.
- The paper develops a conceptual model that could serve as a building block for the broader framework of macroprudential policy making in Korea.
- It is assumed that the policy maker imposes taxes on key aggregate financial ratios in the banking system to mitigate excessive leverage over the economic cycle.
- The model is calibrated for Korea.
- The results illustrate how countercyclical tools, such as simple taxes on key financial ratios, could be incorporated to enrich the broader macroprudential policy framework in the Korean context.

### Model and Calibration
- Conceptual macroprudential model focused on aggregate financial ratios in the banking system.
- Policy lever: taxes on key aggregate financial ratios to influence banking system leverage.
- Calibration: the model is calibrated specifically for Korea.

### Key Findings
- Countercyclical tools can be implemented through simple taxes on key financial ratios.
- Such tools could mitigate excessive leverage in the banking system over the economic cycle.
- Incorporating taxes on aggregate financial ratios can enrich Korea's broader macroprudential framework.

### Policy Recommendations and Implications
- Consideration of targeted, countercyclical macroprudential tools that tax key banking-system ratios to manage leverage.
- Use of the presented conceptual model as a building block within a broader macroprudential policy framework tailored to Korea.

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## Content in this bundle

- **1. Korea: Macroprudential Model Simulations, 2002–2010**
  - [1. Korea: Macroprudential Model Simulations, 2002–2010 (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2012/_wp1227.pdf.md){rel="alternate" type="text/markdown"}
  - [1. Korea: Macroprudential Model Simulations, 2002–2010 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2012/_wp1227.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/managing-non-core-liabilities-and-leverage-of-the-banking-system-a-building-block-for-25671_