Analyzing financial stability with emphasis on banking sector in Iran: An early warning system approach
Subject Areas : Applied Economics
1 - ندارد
2 - ندارد
Keywords: financial stability, banking crisis, Early Warning System,
Abstract :
In the literature, the financial stability is defined as a condition that systematic crises do not threaten the stability of the macroeconomy. Financial instability and its great shock on real output in many countries faced with economic crisis have demonstrated the need and importance of developing models for prediction and prevention of crises for economic planners and make them able to investigate the causes of crisis and prevent its recurrence as well. In this study, an early warning system of bank crisis for Iran has been estimated by using probabilistic method(probit approach), for the 2002- 2011 The probable function designed in this paper shows that three variables, weight average of the real interest rate of banking deposit, weight average of the real interest rate of banking credit and the growth rate of property price, are the three predicators of probability of the banking crisis. The specified model in this study has signaled the banking crises and in 92 percent of the cases in which crises have happened the model has been able predicate it with probability of more than 40 percent and Only, 7.14 percent has been missed and 9.52 percent has signaled wrongly. Hence, it confirms the relative predictive power of our model in crises period.
