Financial System Stability Assessment Research Articles

West African Economic and Monetary Union: Financial Sector Assessment Program–Financial System Stability Assessment

The Financial Sector Assessment Program (FSAP) was conducted amid an economic rebound two years into the COVID-19 pandemic that had a limited impact on the financial sector. Several member states have experienced political instability, with coups in Burkina Faso and Mali leading to economic sanctions for the latter, and an attempted coup in Guinea-Bissau. Yet, short of further political deterioration, economic recovery is expected to persist. The last FSAP was conducted in 2008.

Chile: Financial System Stability Assessment

Chile: Financial System Stability Assessment

Georgia: Financial System Stability Assessment

Georgia: Financial System Stability Assessment

Italy

The Italian financial safety net and crisis-management framework has been substantially strengthened since the 2013 FSAP. Among others, the authorities have enhanced the early intervention framework, introduced a new resolution regime (including recovery and resolution planning requirements), and introduced reforms of the two deposit guarantee schemes (DGS) that are active in Italy. Further enhancements at the Banking Union level, as outlined in the 2018 Financial System Stability Assessment for the euro area (IMF Country Report No. 18/226)—including the introduction of an adequately funded common deposit guarantee scheme, a harmonized bank liquidation framework and a finetuning of state aid rules—would yield further benefits for Italy.

Asian Miracle, Asian Tiger, or Asian Myth? Financial Sector and Risk Assessment through FSAP Experience: Enhancing Bank Supervision in Thailand

From free people to a unified Thai kingdom in the mid-14th century (Siam until 1939), and from that to Asian Tiger (or Dragon). Although Thailand saw Japanese’s brief invasion in 1941, it has never been colonized by a European power. Nevertheless, Thailand has witnessed repeated political turmoil and two military coups in this millennium alone; in 2006, Prime Minister THAKSIN Chinnawat was ousted, and in May 2014, YINGLAK was removed from office. When taking these disruptions into account, one can be easily convinced that Thailand’s economic performance amid unimaginable challenges is a remarkable story to tell. The Bank of Thailand as well as regulatory and supervisory authorities have played a pivotal role in achieving financial stability. In May/June, Thailand underwent the Financial System Stability Assessment (FSSA) as part of the Financial Sector Assessment Program (FSAP), the experience has been very positive. The results of stress tests indicate that the BOT’s fiscal, structural, and monetary reforms have strengthened the financial system significantly since the Asian crisis of the late 1990s. In spite of numerous signs of inflationary pressure worldwide, inflation in Thailand is still persistently subdued; however, as an exported dependent nation, Thailand’s economy is always susceptible to imported inflation. To insulate its economy from exogenous as well as cross-border shocks, the BOT along with national regulatory and supervisory agencies must focus on reforms and policies to reduce potential detriments of the boom-and-bust cycles. We caution the Thai government authorities to stand ready to respond because the factors that are supportive of the present low inflation could reverse any time without a warning in the near future.

Kuwait: Financial System Stability Assessment

Kuwait: Financial System Stability Assessment

Euro Area Policies: Financial System Stability Assessment

Euro Area Policies: Financial System Stability Assessment

Belgium: Financial System Stability Assessment

Belgium: Financial System Stability Assessment

Jamaica: Financial System Stability Assessment

Jamaica: Financial System Stability Assessment

Brazil: Financial System Stability Assessment

Brazil: Financial System Stability Assessment

THE REAL SECTOR OF UKRAINIAN ECONOMY CAPITALIZATION: TRENDS AND CONSEQUENCES

Introduction. The main trends in the corporate finance of Ukraine hardly could be explained with the traditional corporate finance frameworks which the trading-off or pecking order approaches included. In the beginning of 2017, the whole corporate sector indebtedness (calculated as total unconsolidated debt to book value based equity ratio) was substantially higher than a proper level for emerging markets countries. The restoring of the real sector equity capital sufficiency is crucial for the whole financial system stabilization and investments fostering. Purpose. The investigation of the book value decapitalization in real sector of Ukrainian economy scale and its potential impact on the financial system stability and economic growth assessment. Methods. International comparisons of the total book value capital to GDP ratios, the real book value capital (denominated by GDP deflator) trends and structural changes investigation. Results. The volume and the dynamics of the book value capitalization in Ukrainian economy’s real sector are investigated. The overall level of capital losses is determined (18% decline with 5 years) and significant structural imbalances are revealed. The trends of real sector book value equity changes analyzed comparing with the nominal GDP changes trends in Ukraine and foreign countries. A comparative analysis trends of real sector capital return in Ukraine and some European countries is conducted. The total book value capital to GDP ratio in Ukraine does not differ significantly from other countries. We explain these results capital by the low level of GDP in Ukraine and not by the book value capital sufficiency. The low level of legal productivity the real sector aggregate equity capital in Ukraine is determined. The share of accumulated capital in real sector book value equity in Ukraine was closed to 0 and fall negative in 2017. We explain this by the low level of legal productivity of equity capital in Ukraine. Conclusion. The capital accumulation in the real sector of Ukrainian economy is structurally deteriorated and generates significant risks for the stability of ountry financial system. The lack of capital in real sector hardly can be compensated by the financial sector and government investments. Thus, we can conclude that deficiency of equity in real sector is a strong barrier for the economic growth.

Saudi Arabia: Financial System Stability Assessment

Saudi Arabia: Financial System Stability Assessment

Lebanon: Financial System Stability Assessment

Lebanon: Financial System Stability Assessment

Kingdom of the Netherlands-Netherlands: Financial System Stability Assessment

Kingdom of the Netherlands-Netherlands: Financial System Stability Assessment

Spain: Financial System Stability Assessment

Spain: Financial System Stability Assessment

Turkey: Financial Sector Assessment Program: Financial System Stability Assessment

Turkey: Financial Sector Assessment Program: Financial System Stability Assessment

Finland

This paper discusses key findings of the Financial System Stability Assessment concerning Finland. It reveals that Finland’s banking system remains well capitalized and profitable. Although low interest rates have squeezed net interest income, banks have increased income from trading and insurance and reduced cost-income ratios, helping to maintain profitability. Nonperforming loans have remained low and capitalization ratios are well above requirements, though buffers may be exaggerated by the aggressive use of risk weights. The Net Stable Funding Ratio suggests that vulnerabilities from maturity mismatches are limited in aggregate. Nevertheless, previously identified vulnerabilities remain, and some have increased.

Mexico

This paper discusses the findings and recommendations made in the Financial System Stability Assessment for Mexico. Mexico’s economic fundamentals are strong. The medium-term outlook for the Mexican economy foresees steady growth underpinned by strong macroeconomic policies, broad reform initiatives, and relatively strong balance sheets. Key risks are external and include a U.S. growth slowdown, lower oil prices, and volatility in global financial markets. The financial system is broadly resilient, notwithstanding some weaknesses under certain adverse shocks. The solvency and liquidity stress tests of the banking system indicate that it can withstand severe adverse macro-financial shocks despite large capital losses in some cases.

Republic of Moldova: Financial System Stability Assessment

Republic of Moldova: Financial System Stability Assessment

Russian Federation: Financial System Stability Assessment

Russian Federation: Financial System Stability Assessment