A Framework for Assessing Systemic Risk

When faced with financial crises, authorities worldwide tend to respond aggressively with public support measures. Given the adverse impact on moral hazard and market discipline, support measures involving public money are ideally limited to crisis...

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Bibliographic Details
Main Author:	Dijkman, Miquel
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ACCESS TO INFORMATION ACCOUNTABILITY ACCOUNTING ACID TEST RATIO AMOUNT OF CAPITAL ASSET CLASS ASSET PRICES BALANCE SHEET BALANCE SHEET GROWTH BALANCE SHEETS BANK FAILURES BANK LENDING BANK OF ENGLAND BANKING CRISES BANKING INSTITUTION BANKING SERVICES BANKING SYSTEM BANKRUPTCY BENEFICIARIES BENEFICIARY BID BOND BONDS BOOK ENTRY BROKER BUSINESS CYCLE BUSINESS CYCLES CAPITAL ADEQUACY CAPITAL MARKETS CAPITAL REQUIREMENTS CASH MANAGEMENT CDS CENTRAL BANK CENTRAL BANKS CENTRAL SECURITIES DEPOSITORIES CLEARING HOUSE CLEARING HOUSES COLLATERAL COLLATERALIZATION CONSUMPTION EXPENDITURE CONTINGENCY PLANNING CORPORATE BOND CORRESPONDENT BANKS CREDIT DEFAULT CREDIT DEFAULT SWAP CREDIT DEFAULT SWAPS CREDIT DERIVATIVES CREDIT LINES CREDIT RATING CREDIT RISK CREDIT RISK EXPOSURES CREDITOR CREDITORS CUSTODIAN BANKS DEBT DEBT ISSUES DEBT OBLIGATIONS DEBTOR DEFAULT PROBABILITIES DEFAULTS DEPOSIT DEPOSIT INSURANCE DEPOSITORS DEPOSITS DERIVATIVE DERIVATIVE MARKETS DERIVATIVES MARKETS DEVELOPING COUNTRIES DOMESTIC BANKING EQUITIES EUROPEAN CENTRAL BANK EXCHANGE COMMISSION EXCHANGE PAYMENTS EXCHANGE RATE EXCHANGE RATES FAIR VALUE FEE INCOME FINANCE MINISTRIES FINANCIAL ASSET FINANCIAL ASSETS FINANCIAL CONGLOMERATES FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DATA FINANCIAL DEVELOPMENT FINANCIAL DISTRESS FINANCIAL EXPOSURES FINANCIAL INFRASTRUCTURE FINANCIAL INSTABILITY FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL MARKETS DEVELOPMENTS FINANCIAL RISK FINANCIAL RISKS FINANCIAL SERVICES FINANCIAL SHOCK FINANCIAL SHOCKS FINANCIAL STABILITY FINANCIAL STRESS FINANCIAL SUPPORT FINANCIAL SYSTEM FINANCIAL SYSTEMS FINANCIAL TRANSACTIONS FIXED EXCHANGE RATE FOREIGN EXCHANGE FOREIGN FINANCIAL INSTITUTION FRAUD FUTURES GLOBAL FINANCIAL STABILITY GOVERNMENT BONDS HEDGE FUNDS HEDGES HOLDING IMPLIED VOLATILITY INDEBTEDNESS INFRASTRUCTURE INVESTMENT INSTRUMENT INSURANCE COMPANIES INSURANCE COMPANY INSURANCE POLICIES INSURED DEPOSITS INTERBANK MARKETS INTEREST RATE INTEREST RATES INTERNAL CONTROLS INTERNATIONAL BANK INTERNATIONAL SETTLEMENTS INTERPOLATION INVESTMENT ACTIVITIES INVESTMENT BANKS INVESTMENT PORTFOLIO LAWS LEGAL RIGHTS LENDERS LEVEL OF RISK LIFE INSURANCE LINE OF CREDIT LIQUID ASSETS LIQUIDITY LIQUIDITY MANAGEMENT LIQUIDITY RATIO LOAN LOSS OF CONFIDENCE MARK-TO-MARKET MARKET ACCESS MARKET CONDITIONS MARKET DATA MARKET DEVELOPMENTS MARKET DISCIPLINE MARKET LIQUIDITY MARKET MAKER MARKET MAKERS MARKET SHARES MARKET TRANSACTIONS MARKET TURNOVER MATURITY MINISTRIES OF FINANCE MONETARY AUTHORITY MONETARY FUND MORAL HAZARD NATIONAL BANK OF BELGIUM NONBANK INSTITUTIONS NONPAYMENT OESTERREICHISCHE NATIONALBANK OFFSITE SUPERVISION OPERATIONAL RISK PAYMENT SERVICES PAYMENT SYSTEM PAYMENT SYSTEMS PENSION PENSION FUNDS PENSION SYSTEMS POLICY RESPONSE POLICY RESPONSES PORTFOLIO PRICE FORMATION PROBABILITY OF DEFAULT PROBABILITY OF DEFAULTS PROFITABILITY PRUDENTIAL REGULATION PUBLIC FUNDS REMITTANCES REORGANIZATION RETURN RETURN ON EQUITY RETURNS RISK ASSESSMENTS RISK AVERSION RISK FACTORS RISK MANAGEMENT RISK PROFILE SAFER INVESTMENTS SALES OF ASSETS SAVINGS SECURITIES SECURITIES AS COLLATERAL SETTLEMENT SETTLEMENT SYSTEM SETTLEMENT SYSTEMS SHAREHOLDER SHORT-TERM CAPITAL SOLVENCY STOCK EXCHANGE STOCKS SUBSIDIARIES SUPERVISORY AGENCIES SUPERVISORY AUTHORITIES SUPPLY OF CREDIT SURCHARGES SWAP SYSTEMIC RISK TRADING TRANSACTION TRANSACTION COSTS TRANSFER OF SECURITIES UNDERWRITER USE OF COLLATERAL VALUATION VALUE OF COLLATERAL VALUE PAYMENT SYSTEMS WARRANTS WEALTH EFFECTS YIELD CURVE
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100426151636 http://hdl.handle.net/10986/3768

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Summary:	When faced with financial crises, authorities worldwide tend to respond aggressively with public support measures. Given the adverse impact on moral hazard and market discipline, support measures involving public money are ideally limited to crisis situations involving systemic risk: a disturbance in the financial system that is serious enough to affect the real economy. This note sets out the main characteristics of a systemic risk assessment framework: a simple analytical framework that can be used by authorities with financial crisis management responsibilities in times of financial crisis to assess the extent to which that particular crisis situation poses systemic risk.

A Framework for Assessing Systemic Risk

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