We operationalize the definition of systemic risk provided by the IMF, BIS, and FSB and derive testable hypotheses to identify indicators of systemic risk. We map these hypotheses into a two-stage hierarchical testing framework, combining insights from the early-warning literature on financial...

ABSTRACT Banks get sick too – often with devastating consequences for the health of the wider economy. The European Union (EU) and its Member States are eager to boost the banking sector's resilience to systemic crises and reduce the build-up of systemic risk. This paper investigates the...