Countercyclical Financial Regulation

The global financial crisis has focused much attention on procyclicality, particularly in the context of a macroprudential framework. This paper reviews a set of prudential measures that can be adopted by national authorities to deal with procyclicality and discusses issues in designing and implementing such measures. For developing countries, in addition to some general considerations on policy design and implementation, a range of issues may warrant special attention. These include the balance between financial stability and financial development objectives, selection and calibration of policy instruments according to national circumstances and taking into account data limitations and capacity constraints as well as other practical challenges, and continued efforts to improve supervisory independence, supervisory powers and analytical capacity and to ensure adequate resources in order to perform the required tasks. Given the limited practical experience with countercyclical prudential measures, developing countries (as well as developed countries) will have to ascend a learning curve and experiment with select instruments while carefully monitoring and evaluating their effectiveness over time before a framework matures.

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Bibliographic Details
Main Author: Ren, Haocong
Format: Policy Research Working Paper biblioteca
Language:English
Published: 2011-10-01
Subjects:ACCOUNTING, ACCOUNTING PRINCIPLES, ACCOUNTING RULES, ACCOUNTING STANDARD, ACCOUNTING STANDARDS, AMOUNT OF CREDIT, ARBITRAGE, ASSET PRICE, ASSET PRICES, AVAILABILITY OF CREDIT, BALANCE SHEET, BANK FAILURES, BANK OF ENGLAND, BANK OF KOREA, BANK OF SPAIN, BANK PROFITS, BANKING INSTITUTIONS, BANKING SECTOR, BANKING SUPERVISION, BANKING SYSTEM, BANKS, BORROWER, BUSINESS CYCLE, BUSINESS CYCLES, CAPACITY CONSTRAINTS, CAPITAL ADEQUACY, CAPITAL ALLOCATION, CAPITAL BASE, CAPITAL CONTROL, CAPITAL CONTROLS, CAPITAL FLOW, CAPITAL FLOWS, CAPITAL INFLOWS, CAPITAL MARKET, CAPITAL MOVEMENTS, CAPITAL PLANNING, CAPITAL RATIO, CAPITAL REQUIREMENT, CAPITAL REQUIREMENTS, CAPITAL STANDARDS, CENTRAL BANK, COLLATERAL, COMMODITIES, COMMODITY, COMMODITY PRICES, CONSOLIDATED SUPERVISION, CONSUMER CREDIT, CONSUMER PROTECTION, CORPORATE GOVERNANCE, CREDIBILITY, CREDIT ASSESSMENT, CREDIT CARD, CREDIT CARD DEBT, CREDIT EXPANSION, CREDIT GROWTH, CREDIT INSTITUTIONS, CREDIT INTERMEDIATION, CREDIT LOSS, CREDIT LOSSES, CREDIT QUALITY, CREDIT RATING, CREDIT RATING AGENCIES, CREDIT RISK, CREDITOR, CREDITOR RIGHTS, CREDITORS, CREDITWORTHINESS, CROSS-BORDER CAPITAL, CURRENCY, CURRENCY MISMATCHES, DEBT, DEBT SERVICE, DEFAULT RISK, DEFAULTS, DERIVATIVES, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPING ECONOMIES, DOMESTIC BANKS, ECONOMIC CONDITIONS, ECONOMIC PERFORMANCE, EMERGING MARKET, EMERGING MARKET ECONOMIES, EQUITY CAPITAL, EXPOSURES, EXTERNAL CREDIT RATINGS, FAIR VALUE, FINANCIAL ACCOUNTING, FINANCIAL ASSET, FINANCIAL CRISIS, FINANCIAL DEEPENING, FINANCIAL DEVELOPMENT, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL INSTRUMENTS, FINANCIAL MARKET, FINANCIAL REGULATION, FINANCIAL SECTOR, FINANCIAL SERVICES, FINANCIAL STABILITY, FINANCIAL STATEMENTS, FINANCIAL STRESS, FINANCIAL SYSTEM, FINANCIAL SYSTEM STABILITY, FINANCIAL SYSTEMS, FINANCIAL TRANSACTIONS, FISCAL POLICIES, FISCAL POLICY, FLOW OF CREDIT, FOREIGN BANKS, HOST COUNTRIES, HOST COUNTRY, HOUSEHOLD INCOME, HOUSING, INCOME SMOOTHING, INFORMATION ASYMMETRY, INFORMATION TECHNOLOGY, INSTRUMENT, INTANGIBLE, INTANGIBLE ASSETS, INTANGIBLES, INTEREST RATE, INTEREST RATES, INTERNATIONAL ACCOUNTING STANDARDS, INTERNATIONAL BANK, INTERNATIONAL CAPITAL, INTERNATIONAL DEBATE, INTERNATIONAL FINANCIAL INSTITUTIONS, INTERNATIONAL STANDARD, LAWS, LEGAL FRAMEWORK, LETTERS OF CREDIT, LIQUIDITY, LIQUIDITY MANAGEMENT, LOAN, LOAN AMOUNT, LOAN QUALITY, MACROECONOMIC CONDITIONS, MACROECONOMIC MANAGEMENT, MACROECONOMIC POLICIES, MACROECONOMIC POLICY, MANDATES, MARKET RISK, MARKET STRUCTURE, MATURITY, MIGRATION, MINIMUM CAPITAL REQUIREMENT, MINIMUM CAPITAL REQUIREMENTS, MONETARY AUTHORITIES, MONETARY CONTROL, MONETARY POLICY, MORTGAGE, MORTGAGE LOANS, MORTGAGES, NET OPERATING INCOME, NON-PERFORMING LOANS, OPEN ECONOMIES, POLICY RESPONSES, POLITICAL ECONOMY, PORTFOLIO, PORTFOLIOS, PRICE MOVEMENT, PRICE STABILITY, PRIVATE SECTOR DEVELOPMENT, PROBABILITY OF DEFAULT, PRUDENTIAL REGULATION, PRUDENTIAL REQUIREMENTS, RATING AGENCIES, REAL INTEREST, REAL INTEREST RATES, REGULATOR, REGULATORS, REGULATORY AUTHORITIES, REGULATORY CAPITAL, REGULATORY ENVIRONMENT, REGULATORY FRAMEWORK, REGULATORY STRUCTURE, REGULATORY TREATMENTS, REPO, REPO RATE, REPOS, RESERVE, RESERVE BANK, RESERVE BANK OF INDIA, RESERVE REQUIREMENTS, RESERVES, RETAINED EARNINGS, RISK EXPOSURE, RISK MANAGEMENT, RISK MANAGEMENT SYSTEMS, RISK WEIGHTED ASSETS, RISK WEIGHTS, SECURITIES, SHORT-TERM CAPITAL, SMALL BANKS, SOCIAL COSTS, SOLVENCY, STANDARD ASSETS, STATISTICAL ANALYSIS, SUBSIDIARIES, SUBSIDIARY, SUPERVISION OF BANKS, SUPERVISORY AUTHORITIES, SUPERVISORY AUTHORITY, SUPERVISORY POWER, SUPERVISORY POWERS, SUPPLY OF CREDIT, SYSTEMIC RISK, TAX, TAX DEDUCTION, TAX POLICIES, TAX TREATMENTS, TIER 1 CAPITAL, TRADING, TRANSACTION, TRANSPARENCY, VOLATILITY, WRITEOFFS,
Online Access:http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111004135445
http://hdl.handle.net/10986/3587
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