Paper Information

Journal:   JOURNAL OF FINANCIAL ECONOMICS (FINANCIAL ECONOMICS AND DEVELOPMENT)   winter 2019 , Volume 12 , Number 45 #p00531; Page(s) 1 To 26.
 
Paper: 

Measure of the fragility of the banking system of Iran based on BSFI

 
 
Author(s):  POUREBADOLLAHAN COVICH MOHSEN*, ASGHARPOUR HOSSEIN, FALLAHI FIROUZ, Sattarrostami Hemmat
 
* Department of Economic Development and Planning, Faculty of Economics, Management and Business, University of Tabriz
 
Abstract: 
Unlike case of currency crises, construction of a time series index to identify banking crisis episodes is highly difficult, particularly because of the lack of reliable data on banking sector variables such as the level of non− performing loans. Accordingly, existing methods used to pinpoint banking crisis years are generally event− based. These methods due to the use of events such as closures, mergers, runs on financial institutions, and government emergency measures may suffer from selection bias. For this purpose, This paper uses seasonally time series data of Iran during 1381: 1-1394: 4 for construction the banking sector fragility index (BSFI) to measure the levels of fragility and risk-taking within the Iranian banking sector. The BSFI identified three main episodes of excessive risk-taking and two periods of high fragility over the study period. Two periods of high fragility in the banking sector resulted in banking sector difficulties in 2001 and 2009 respectively, mainly attributed to shocks emanating from the electoral cycle. Overall, the BSFI seems to be highly useful in measurement and monitoring of banking sector fragility.
 
Keyword(s): excessive risk-taking,banking System fragility,banking crises,Iran
 
References: 
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