Monetary policy credibility and macrodynamics: evidence from Ghana

Akosah, Nana Kwame; Acquaye, Ivy; Loloh, Francis White

doi:10.1080/13504851.2017.1332739

Cited by 5 publications

(5 citation statements)

References 6 publications

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“…Kondratovs (2014) found that financial stability in Latvia began deteriorating in 2002, demonstrating the necessity of having an index to signal growing stress, permitting proper intervention by authorities. Akosah, Loloh, Lawson, and Kumah (2018) also found interesting results for Ghana using these techniques. To the best of our knowledge, no study has attempted the construction of an aggregate financial stability index for Botswana.…”

Section: Overview Of the Literature: Financial Stability Index Constr...mentioning

confidence: 87%

Constructing an aggregate financial stability index for Botswana

Modise,

Setlhare,

Sekwati

2023

5002

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This paper evaluates the likely benefits of adopting an aggregate financial stability index (AFSI) as an additional mechanism for monitoring the financial system in Botswana. Since the turn of the new century that brought a sequence of financial episodes, financial stability remains a topical issue among researchers and policymakers. To guard against financial instability, authorities continually look for mechanisms to effectively detect stress in the financial system. This paper builds on recent literature to develop an AFSI for Botswana constructed from sub-indices that reflect financial development, financial vulnerability, financial soundness, and external environment developments. To determine the existence, or absence, of effects from key macroeconomic variables on the AFSI, the autoregressive distributed lag (ARDL) model is used. The study found that the synthetic AFSI constructed is robust and able to track the impact of different macroeconomic events on the stability of the financial sector in Botswana. As such, gains can be expected from the use of an AFSI. In this regard, policy makers will be able to unambiguously interpret the prevailing level of financial stress and respond accordingly.

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Section: Overview Of the Literature: Financial Stability Index Constr...mentioning

confidence: 87%

Constructing an aggregate financial stability index for Botswana

Modise,

Setlhare,

Sekwati

2023

5002

View full text Add to dashboard Cite

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“…Central banks seemed to embrace this framework and developed AFSIs for their jurisdictions, making some country-specific modifications to the prototype. Alterations were made to the variables selected in the AFSI and the weighing method (see Albulescu, 2008;Morris, 2010;Cheang and Choy, 2011;Popovska, 2014;Akosah et al, 2018;Al-Rjoub, 2021). Besides the AFSI, the BSI gauges the stability of the economy's banking sector.…”

Section: Brief Review Of Literaturementioning

confidence: 99%

“…The AFSI is comprised of subindices for financial development, financial soundness, financial vulnerability, and the world economic climate. The AFSI indicators are selected based on literature (see Albulescu, 2008;Morris, 2010;Cheang and Choy, 2011;Popovska, 2014;Akosah et al, 2018), data availability, and the characteristics of our economies. The subindices, indicators, descriptions, and signs are presented in Table 1.…”

Section: The Aggregate Financial Stability Indexmentioning

confidence: 99%

“…Central banks developed aggregate indicators such as the AFSI, the BSI, and the Financial Stress Index, which are single measures of financial stability that provide insights into the determinants of financial stress. These indices often use financial soundness indicators, macroeconomic indicators, and global indicators which impact the local financial system (see Albulescu, 2008;Geršl and Hermanek, 2008;Morris, 2010;Kočišová, 2014;Huotari, 2015;Oet et al, 2015;Akosah et al, 2018). This paper presents two financial stability measures for the monetary union of Curaçao and Sint Maarten, which fit the Early Warning Monitoring System (EWMS) of the CBCS.…”

Section: Introductionmentioning

confidence: 99%

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Measuring Financial Stability in Curaçao and Sint Maarten

Ooft,

Baank

2024

Journal of Applied Finance &Amp; Banking

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Assessing the solidity of the financial system may be cumbersome since there is no single comprehensive indicator to measure financial stability. This paper presents two aggregate measures that can be deployed as early warning measures of financial stability for the monetary union of Curaçao and Sint Maarten, mainly focusing on the banking sector. As this sector comprises most of the monetary union's assets, the constructed measures are mainly focused on this sector. Following financial stability literature, we apply empirical normalization and aggregation to construct an Aggregate Financial Stability Index (AFSI) and a Banking Stability Index (BSI). These indices have been gaining popularity among central banks to assess financial stability on top of conventional measures such as Financial Soundness Indicators (FSIs) and credit cycles. The AFSI comprises banking-sector indicators, macro-financial developments, and international trends, while the BSI captures dimensions of banks' financial soundness. We benchmark the AFSI and the BSI to the period of deteriorating macro-financial conditions induced by the coronavirus crisis, and the development in the indices was as expected. Based on the robustness analyses conducted, we deem the constructed indices plausible for measuring and tracking financial stability within the monetary union of Curaçao and Sint Maarten. JEL classification numbers: C20, C45, E58, F15, G21. Keywords: Early warning indicators, Financial stability, Financial soundness indicators.

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“…, 2022) and stock market volatility (Akter & Nobi, 2018; Sui et al ., 2022). In order to measure financial stability, several authors such as (Hawkins & Klau, 2000; End, 2006; Gadanecz & Jayaram, 2009; Roy, Biswas, & Sinha, 2015; Aikman, Kiley, Lee, Palumbo, & Warusawitharana, 2017; Lee, Posenau, & Stebunovs, 2017, Lee, Posenau, & Stebunovs, 2020; Akosah, Loloh, Lawson, & Kumah, 2018; Lepers & Serrano, 2020) have developed an index to measure financial stability.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Are shadow banks a threat to the financial stability of EMEs?

Arora,

Kashiramka

2023

CAFR

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PurposeShadow banks or non-bank financial intermediaries (NBFIs) are facilitators of credit, especially in emerging market economies (EMEs). However, there are certain risks associated with them, such as their unchecked leverage and interconnectedness with the rest of the financial system. In light of this, the present study analyses the impact of the growth of shadow banks on the stability of the banking sector and the overall stability of the financial system. The authors further examine the effect of the growth of finance companies (a type of NBFIs) on financial stability.Design/methodology/approachThe study employs data of 11 EMEs (monitored by the Financial Stability Board (FSB)) for the period 2002–2020 to examine the above relationships. Panel-corrected standard errors method and Driscoll–Kray standard error estimation are deployed to conduct the analysis.FindingsThe results signify that the growth of the shadow banking sector and the growth of lending to the shadow banking sector are negatively associated with the stability of the banking sector and increases the vulnerability of the financial system (overall instability). This implies that the higher the growth of the shadow banks, the higher the financial fragility. Finance companies are also found to negatively affect financial stability. These findings are validated by different estimation methods and point out the risks posed by the NBFI sector.Originality/valueThe extant study builds a composite index (Financial Vulnerability Index (FVI)) to measure financial stability; thus, the findings contribute to the evolving literature on shadow banks.

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Monetary policy credibility and macrodynamics: evidence from Ghana

Cited by 5 publications

References 6 publications

Constructing an aggregate financial stability index for Botswana

Constructing an aggregate financial stability index for Botswana

Measuring Financial Stability in Curaçao and Sint Maarten

Are shadow banks a threat to the financial stability of EMEs?

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