Analysing Banking Sector Conditions: How to Use Macro-Prudential Indicators

70 Pages Posted: 15 Nov 2005

See all articles by Leena M Mörttinen

Leena M Mörttinen

Nordea Bank, Finland

Paolo Poloni

European Central Bank (ECB)

Patrick Sandars

European Central Bank (ECB)

Jukka M. Vesala

Bank of Finland - Finnish Financial Supervision Authority (FIN-FSA)

Date Written: April 2005

Abstract

This paper presents the methodological and statistical framework for macro-prudential analysis of the financial condition of the EU banking sector that has been adopted by the European System of Central Banks (ESCB). The framework is also a central component of broader financial stability assessments carried out by the ECB in co-operation with national authorities.

The framework has three main building blocks, which draw on a large number of macro-prudential indicators. The first block is designed for assessing the financial condition of the banking sector. The second building block provides a framework for analysing potential sources of risk and vulnerability to which banks are exposed and an assessment of the importance of related exposures. The final part of the analysis deals with the resilience of banks vis-a-vis the se different sources of risk and vulnerability. Analysing the impact of the identified risks on banks' financial condition is the ultimate objective of the ESCB banking sector stability analysis.

Suggested Citation

Mörttinen, Leena M and Poloni, Paolo and Sandars, Patrick and Vesala, Jukka, Analysing Banking Sector Conditions: How to Use Macro-Prudential Indicators (April 2005). ECB Occasional Paper No. 26, Available at SSRN: https://ssrn.com/abstract=752086 or http://dx.doi.org/10.2139/ssrn.752086

Leena M Mörttinen (Contact Author)

Nordea Bank, Finland ( email )

Helsinki, Nordea 00020
Finland

Paolo Poloni

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Patrick Sandars

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Jukka Vesala

Bank of Finland - Finnish Financial Supervision Authority (FIN-FSA) ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
542
Abstract Views
3,634
Rank
103,214
PlumX Metrics