Can Financial Soundness Indicators Help Predict Financial Sector Distress?

Author/Editor:

Marcin Pietrzak

Publication Date:

July 23, 2021

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

This paper shows how the role of Financial Soundness Indicators (FSIs) in financial surveillance can be usefully enhanced. Drawing from different statistical techniques, the paper illustrates that FSIs generate signals that can accurately detect, with 4 to 12 quarters lead, emerging financial distress—as measured by tight financial conditions.

Series:

Working Paper No. 2021/197

Frequency:

regular

English

Publication Date:

July 23, 2021

ISBN/ISSN:

9781513593005/1018-5941

Stock No:

WPIEA2021197

Pages:

55

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