A Financial Stress Index for a Highly Dollarized Developing Country: The Case of Lebanon

Mansour Ishrakieh, Layal and Dagher, Leila and El Hariri, Sadika (2019): A Financial Stress Index for a Highly Dollarized Developing Country: The Case of Lebanon. Published in: Central Bank Review , Vol. 20, No. 2 (2021): pp. 43-52.

Abstract

The aim of this paper is to construct the first comprehensive Financial Stress Index for Lebanon, dubbed the IFEFSI (Institute of Financial Economics Financial Stress Index). This is a broad coincident composite index that includes three different market segments; the banking sector, the equities market, and the foreign exchange and other markets. It is constructed as a continuous real-time measure that quantifies the level of systemic stress by measuring latent conditions. As a metric for financial conditions, the IFEFSI should provide valuable information to macroprudential regulators whose aim is to maintain a smooth and resilient financial system. By using it as a tool to help monitor, identify, and address any potential crisis, they are better equipped to maintain financial and economic stability in Lebanon.

• Item Type: MPRA Paper
• Language: English
• Keywords: Financial Stress Index, Financial Crisis, Lebanon, Economic Policy
• Subjects: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; G - Financial Economics > G0 - General > G01 - Financial Crises; G - Financial Economics > G1 - General Financial Markets > G18 - Government Policy and Regulation; G - Financial Economics > G2 - Financial Institutions and Services > G20 - General

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