Work detail

Measuring Financial Instability: A Survey

Author: Bc. Jana Urbánková
Year: 2012 - summer
Leaders: PhDr. Jaromír Baxa Ph.D.
Work type: Bachelors
Language: English
Pages: 87
Awards and prizes: B.A. with distinction from the Dean of the Faculty of Social Sciences for an excellent state-final examination performance and for an extraordinarily good bachelors diploma thesis.
Abstract: This thesis aims to analyze how various theoretical definitions describe and assess financial stability, and how these definitions are actually being reflected in the measurement methods used to evaluate financial stability. The first section lists different theoretical approaches to defining financial stability, extrapolates main components that characterize these approaches, and compares these approaches based on the components. The thesis continues with a description and critical assessment of financial stability measurement methods. Special attention is paid to financial conditions and financial stress indexes, which are compared based on actual data for the United States. The last section explores to what extent these components are compatible with financial stability measurement methods listed in the previous section. This thesis also points out that most methods measure financial instability, as opposed to financial stability, perhaps because instability is less abstract and, thus, more convenient for an effective measurement. The thesis concludes that recent quantitative assessments of financial stability are real time assessments rather than strong predictive indicators of financial (in)stability and, thus, they do not offer policymakers enough time and information for timely policy actions. In this respect, it is likely that early warning systems will be gaining on importance.
Downloadable: BT Urbánková
June 2023


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