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underpricing of risk made possible by regulatory arbitrage and shadow financing fueled the credit and twin real estate bubbles of … the mid-2000s. Across countries and over time bubbles have been particularly acute in real estate markets reflecting not …
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We provide a theory to investigate the implications of time-varying bailout policy for rational bubbles in an infinite …-horizon production economy. In particular, we ask two questions. First, should the government bail out asset bubbles? Second, if yes, how … bubbles are vulnerable to market sentiment and resource-consuming. The systematic risk of bubble bursting causes both asset …
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Using household survey data, we document evidence of a loosening of credit standards in Euro area countries that experienced a property price boom-and-bust cycle. Borrowers in these countries exhibited significantly higher loan-to-value (LTV) and loan-to-income (LTI) ratios in the run up to the...
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This paper describes concepts and tools behind macroprudential monitoring, and the growing importance of macroprudential tools for assessing the stability of financial systems. This paper also employs a macroprudential approach in examining financial soundness and identifying its determinants....
Persistent link: https://www.econbiz.de/10010529694
This paper develops an analytical framework that can be used to anticipate problems in the banking system and enable supervisors to take mitigating actions at an early stage. This paper has two components. First, it develops an early warning indicator that is intended to capture a number of the...
Persistent link: https://www.econbiz.de/10011283443
The economic and financial crisis of the year 2008 highlighted the need for banking sector regulation via the creation of the banking union. The Bank Recovery and Resolution Directive (BRRD) represents an important milestone in the formation of the banking union. It is supposed inter alia to...
Persistent link: https://www.econbiz.de/10012242333