This paper while emphasising the importance of the concept of financial stability in wake of recent global financial crisis in particular and other (banking and financial) crises in general attempts to highlight the significance of the soundness of banking sector in emerging economies where banking sector constitutes a lion’s share in the financial system. Further, an attempt is made to define financial stability in backdrop of the ongoing definition debate for financial stability. Another contribution of this study is that, employing the most appropriate key determinants of banking sector soundness, the paper models a simple and basic axiomatic form of banking stability index (BSI) in the context of an emerging economy banking sector.
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