Wirtschaftsingenieurwesen und Management

Business Management Stability and Banking Systems

Abstract

Richie Gourd

Regular financial stability assessment and the identification of early warning indicators signalling coming risks to the banking system are major tasks of central banks and supervisory authorities. A safe and sound banking system ensures the optimal allocation of capital resources, and regulators therefore aim to prevent costly banking system crises and their associated adverse feedback effects on the real economy. This paper introduces a continuous and forward-looking stability indicator for the German banking system which is used to identify early warning indicators and spill over effects in both regional banking and international financial markets. The worldwide monetary emergency was a severe shock to states all over the planet. It uncovered extreme administrative holes and twisted impetuses in the financial area and the in general monetary framework, which lead to a development of chance openings not just by banks however "shadow" banks too.