Quantitative Assessment of the Financial Sector: An Integrated Approach
IMF Working Papers, August 1, 2004
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- Quantitative Assessment of the Financial Sector: An Integrated Approach
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Bibliographic details
- Authors: Rupert D Worrell
- Published: August 1, 2004
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451857184.001
Summary
- Proposes a strategy to make best use of available quantitative techniques of financial sector assessment.
- Emphasizes that quantitative assessment should be complemented by qualitative assessment, including reviews of relevant standards and codes.
- Notes that it will seldom be possible to employ every technique, but a wider range of methodologies increases insight into strengths and vulnerabilities of the financial sector.
Methodological components (enumerated techniques)
- Early warning systems
- Financial sector forecasts
- Stress tests for systemically important financial institutions
- Interbank contagion analysis
- Corporate and household financial indicators
- Qualitative assessments, including reviews of relevant standards and codes
Practical guidance and limitations
- The wider the range of methodologies used, the greater the potential insight into financial sector strengths and vulnerabilities.
- It will seldom be possible to employ every one of the listed techniques in practice.
- Quantitative assessment is always complemented by qualitative assessment.
Policy implications and recommendations
- Use an integrated approach combining multiple quantitative techniques to improve detection of financial system risk and weakness.
- Complement quantitative tools with qualitative reviews (standards and codes) to form a more complete assessment of financial sector stability.
- Tailor the selection of techniques to available data, institutional capacity, and the specific vulnerabilities of the financial sector being assessed.
Subjects and keywords (topic mapping)
- Subjects: Banking; Economic sectors; Financial sector; Financial Sector Assessment Program; Financial sector policy and analysis; Financial sector stability; Financial soundness indicators; Stress testing
- Keywords: balance sheet adjustment; BIS volume; credit quality; discriminant analysis; early warning systems; exchange rate crisis; Financial assessment; financial indicators; financial institution; financial institution failure; financial institution forecast; Financial sector; Financial Sector Assessment Program; Financial sector stability; Financial soundness indicators; financial system analysis; financial system risk; financial system weakness; forecast balance sheet variable; Global; interest rate change; macroeconomic forecast; macroeconomic model; profit and loss; Stress testing; WP
Rupert D Worrell. Quantitative Assessment of the Financial Sector: An Integrated Approach, August 1, 2004.
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