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What is Systemic Risk

Handbook of Research on Financial and Banking Crisis Prediction through Early Warning Systems
Systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system.
Published in Chapter:
Early Warning System for Financial Crises
Amir Manzoor (Bahria University, Pakistan)
DOI: 10.4018/978-1-4666-9484-2.ch002
Abstract
To maintain financial stability, prevention of financial crisis is very important. This prevention is especially is especially important for developing countries where we need robust instruments for prediction of financial crises. One such instrument is Early Warning System (EWS). An EWS provided signals that could reflect the likelihood of a financial crisis over a given time horizon. Changing nature of financial risks due to liberalization of economies has increased the importance of an effective EWS. This chapter explores the state of the art of EWS. It is suggested that policy makers should take into account their objectives and related thresholds of various while developing an EWS since there exists a sharp trade-off between correctly calling crises and false alarms.
Full Text Chapter Download: US $37.50 Add to Cart
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Maintaining Financial Stability in the Banking Sector: The Case of Turkey
Possibility that failure of one bank to settle net transactions with other banks will trigger a chain reaction, depriving other banks of funds and preventing them from closing their positions in turn.
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The Economic and Social Value of Financial Literacy
The possibility that an event or decision at an individual level trigger instability or collapse an entire sector or economy.
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Dating Banking and Currency Crises in Turkey, 1990-2014
The risk of collapse of an entire financial system or entire market imposed by interlinkages and interdependencies in a system, where the failure of a single entity or cluster of entities can cause a cascading failure, which could potentially bankrupt or bring down the entire system or market.
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The Effects of Macroprudential Policies on Financial Stability in Developing Countries
The possibility that an event at the industry or company level could trigger strong instability or collapse an entire economy.
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