Description

We propose a toolkit for the assessment of systemic risk buildup in low income countries. We show that, due to
non-linearity in the relationship between credit and financial stability, the assessment should be conducted with
different tools at different stages of financial development. In particular, when the level of financial depth is low,
traditional leading indicators of banking crises have poor predictive performance and the analysis should be based
on indicators that account for financial deepening while taking into consideration countries’ structural limits. By
using this framework, we provide a preliminary assessment of systemic risk buildup in individual SSA countries.

More publications in this series: Working Papers

More publications by: Daniela Marchettini ; Rodolfo Maino