GLOBAL poverty reduction was once a battle financed by well-off countries with the support of international organizations such as the United Nations and the World Bank. But times are changing. Philanthropic contributions by the likes of the Bill & Melinda Gates Foundation and George Soros’s Open Society Foundation, social enterprises such as the Grameen Bank, and the increasing flow of investme...

Asset price bubbles are considered to be a major risk to fi nancial stability. In this article, we show that an asset price bubble poses a bigger risk when banks are exposed to it. This is because when the bubble bursts, banks realise losses and this may trigger bank failures and a credit crunch. In contrast, when overvalued assets are held by ordinary savers, the consequences for fi nancial st...

The tremendous growth of payments system use throughout the world has increased both the possibility of settlement failures and the potential impact of such failures. Two decades ago, the risks were relatively low. For example, the daily payment flow of foreign exchange transactions was roughly the same magnitude as the capital stock of a large U.S. bank. In 1996, however, the average daily tur...

Bank failures threaten the economic system as a whole. Therefore, predicting bank financial failures is crucial to prevent and/or lessen the incoming negative effects on the economic system. This is originally a classification problem to categorize banks as healthy or nonhealthy ones. This study aims to apply various neural network techniques, support vector machines and multivariate statistica...

During 1930-33, the U.S. financial system experienced conditions that were among the most difficult and chaotic in its history. Waves of bank failures culminated in the shutdown of the banking system (and of a number of other intermediaries and markets) in March 1933. On the other side of the ledger, exceptionally high rates of default and bankruptcy affected every class of borrower except the ...

There were hardly any banking crises between 1939 and 1971, so their later reemergence came as a surprise. Central bank supervisors responded practically by discovering and encouraging the adoption of current best practice in risk management by individual banks, without much theoretical input, whereas economists have mostly focused on models which abstract from default. But default is central t...

4.30 The previous FSR underscored the importance of developing strong analytical methods that help better identify, monitor and address systemic linkages. To further study the linkages amongst the scheduled commercial banks, an Integrated Communication Technology (ICT) based network model has been developed to assess the degree of connectedness in the system and to analyse the possible domino i...

The global financial crisis of 2007-2009 exposed critical weaknesses in the financial system. Many proposals for financial reform address the need for systemic regulation--that is, regulation focused on the soundness of the whole financial system and not just that of individual institutions. In this paper, we study one particular problem faced by a systemic regulator: the tension between the di...