scholarly journals Institutional Prerequisites of Financial Fragility within Minsky’s Financial Instability Hypothesis: A Proposal in Terms of 'Institutional Fragility'

2011 ◽  
Author(s):  
Christine Sinapi
Keyword(s):  
Financial Fragility ◽  
Financial Instability

scholarly journals Integrative literature review of the financial fragility hypothesis proposed by Minsky

2021 ◽  
Author(s):  
Cláudio Caríssimo ◽  
Francisval Melo Carvalho ◽  
carlos eduardo Stefaniak Aveline ◽  
Mozar José de Brito ◽  
rafaela maiara caetano
Keyword(s):  
Public Sector ◽  
Fiscal Policy ◽  
Literature Review ◽  
Interest Rates ◽  
Cash Flow ◽  
Empirical Studies ◽  
Financial Fragility ◽  
Financial Instability ◽  
The Public ◽  
Theoretical Assumptions

<p>This paper conducts an Integrative Literature Review on the Financial Fragility Hypothesis presented by Minsky and on Financial Fragility Applied to the Public Sector. Twenty papers were chosen that addressed the proposed theme in both quantitative and qualitative procedures. The topics discussed ways of measuring financial fragility, effects on fiscal policy and need for regulation, relations between investment, cash flow expectations, the influence of interest rates and indebtedness on firms, and financial instability. The integration reinforced the conceptual aspects and propositions presented by Minsky, broadening in an integrated way the understanding of his theoretical assumptions regarding financial fragility, addressing the causes, observations, and economic and institutional consequences, in addition to signaling for insufficiencies of more empirical studies and the public sector.</p>

scholarly journals THE DEVELOPMENT OF DIAGNOSTIC TOOLS FOR ASSESSING THE LEVEL OF FINANCIAL CORPORATIONS’ STABILITY BY CASCADE APPROACH

2021 ◽  
Vol 4 (39) ◽  
pp. 109-120
Author(s):  
M. Hutorna ◽  
M. Rudenko ◽  
Yu. Nemish ◽  
T. Kulinich ◽  
O. Hasii
Keyword(s):  
Financial Stability ◽  
Methodological Approach ◽  
External Environment ◽  
Financial Fragility ◽  
Diagnostic Tools ◽  
Scientific Article ◽  
Stable Operation ◽  
Financial Instability ◽  
A Chain ◽  
The Impact

Abstract. The scientific article is devoted to the development of a methodology for assessing the financial stability of financial corporations using the technology of cascading approach to identify weak areas in their activities and prevent the development of threats to their stable operation. The root causes of their financial instability are selected as the object of financial corporations’ financial stability assessment, and a chain of causal relationships is considered that turn the preconditions into real threats to financial stability or even signs of the corporation’s financial fragility. At the same time, the source of prerequisites for the financial stability of financial corporations in the state and depth of imbalances, which are formed both in the internal and external environment of their operation. It is proved that the tools for assessing internal imbalances in the activities of financial corporations should not be limited to financial imbalances, as their root causes can be concentrated in the organizational, managerial, institutional, conceptual component, in the field of personnel, information, technical support. Therefore, the structuring of imbalances in the activities of financial corporations is proposed to be carried out according to the theory of economic potentials and to identify the following content areas: opportunities, resources, tools, and abilities, the interaction of which forms the potential of financial corporations to operate. A three-stage method for assessing the financial stability of financial corporations has been developed, using a cascading approach, which involves the consistent diagnosis of internal imbalances in the activities of financial corporations: 1) those that arise within each component (resources, means, and capabilities) and are the area of origin of internal threats to their financial stability; 2) imbalances that arise through inter-component interaction (resources-means; abilities-means; resources-abilities) and are the sphere of manifestations of imbalances; 3) those that arise through interaction with the external environment and maximally show the impact of their condition and depth on the level of financial stability. For each of these areas, a set of indicators has been developed and an algorithm for calculating the integrated index of financial stability of a financial corporation has been constructed. The scientific and methodological approach was tested on the example of systemically important banks of Ukraine during 2017—2020, each of which is currently in a continuum of financial stability, and for most banks, there is a growing trend of quantitative measurement of its level. In general, the paper reveals a comprehensive approach to assessing the financial stability of financial corporations, which allows you to systematize those key positions in which the imbalance increases the likelihood of their financial fragility and financial instability. Keywords: financial corporations, financial stability, internal imbalances, economic potential, valuation, indicators, nonlinear rationing. JEL Classіfіcatіon C13, C81, D53, G21, G23          Formulas: 7; fig.: 0; tabl.: 3; bibl.: 22.

scholarly journals Financial Structure, Cycle, and Instability

2021 ◽  
Author(s):  
Kenshiro Ninomiya
Keyword(s):  
Financial Crisis ◽  
Mathematical Models ◽  
Important Determinant ◽  
Financial Structure ◽  
Financial Fragility ◽  
Financial Instability ◽  
Mortgage Crisis ◽  
Real Factor ◽  
Financial Cycles

Abstract The subprime loan mortgage crisis has revived scholarly interest in Minsky’s financial instability hypothesis. The related mathematical models present two types of Minskian financial structures. We construct macrodynamic models that consider both structures and discuss financial instability and cycles. We also demonstrate that one of the financial cycles occurs when a real factor stabilizes the economy. The burden of interest-bearing debt is an important determinant of the cycle. We posit that the escalating financial fragility in this cycle is a more appropriate interpretation of the Minskian financial structure that refers to hedging, speculative and Ponzi behaviors. We further demonstrate that another financial structure destabilizes the economy. If the instability occurs at the point of fragility, then the economy may deteriorate into financial crisis. Fragility then becomes instability.JEL classifications: E12, E32, E33, E43

scholarly journals Modelling Financial Instability

2005 ◽  
Vol 192 ◽  
pp. 57-67 ◽  
Author(s):  
Franklin Allen
Keyword(s):  
Adverse Effects ◽  
Asset Price ◽  
Banking Crises ◽  
Financial Fragility ◽  
Financial Instability ◽  
Policy Issues ◽  
Asset Price Bubbles ◽  
Price Bubbles ◽  
The Business Cycle ◽  
Small Disturbances

Financial instability can have large adverse effects on an economy. One major cause of instability is asset price bubbles. This paper starts by considering how such bubbles can arise due to the expansion of money and credit. The ways in which subsequent financial instability occurs are then discussed. Banking crises can arise due to panics or as a result of the business cycle. Contagion and financial fragility can cause small disturbances to have large effects. Finally, policy issues are touched upon.

scholarly journals Structural change and financial fragility in the Colombian business sector: A post Keynesian approach

2020 ◽  
Vol 39 (80) ◽  
pp. 567-594
Author(s):  
Gonzalo Combita Mora
Keyword(s):  
Economic Growth ◽  
Structural Change ◽  
Financial Fragility ◽  
Financial Instability ◽  
Panel Analysis ◽  
Business Sector ◽  
Balance Sheets ◽  
Do So

This paper aims to establish the theoretical and empirical link between structural change and financial fragility based on the theories of Thirllwall's Law and Minsky's financial instability. In order to do so, a descriptive and econometric panel analysis is carried out for 1846 Colombian companies during the period 1996-2015. A new indicator of financial fragility is created, and from this a relationship is established between the company's balance sheets, structural change, economic growth, the size of the firm, and the Minsky effect that measures the endogeneity of the debt cycle.

scholarly journals Integrative literature review of the financial fragility hypothesis proposed by Minsky

2021 ◽  
Author(s):  
Cláudio Caríssimo ◽  
Francisval Melo Carvalho ◽  
carlos eduardo Stefaniak Aveline ◽  
Mozar José de Brito ◽  
rafaela maiara caetano
Keyword(s):  
Public Sector ◽  
Fiscal Policy ◽  
Literature Review ◽  
Interest Rates ◽  
Cash Flow ◽  
Empirical Studies ◽  
Financial Fragility ◽  
Financial Instability ◽  
The Public ◽  
Theoretical Assumptions

<p>This paper conducts an Integrative Literature Review on the Financial Fragility Hypothesis presented by Minsky and on Financial Fragility Applied to the Public Sector. Twenty papers were chosen that addressed the proposed theme in both quantitative and qualitative procedures. The topics discussed ways of measuring financial fragility, effects on fiscal policy and need for regulation, relations between investment, cash flow expectations, the influence of interest rates and indebtedness on firms, and financial instability. The integration reinforced the conceptual aspects and propositions presented by Minsky, broadening in an integrated way the understanding of his theoretical assumptions regarding financial fragility, addressing the causes, observations, and economic and institutional consequences, in addition to signaling for insufficiencies of more empirical studies and the public sector.</p>

Firms’ leverage ratio and the Financial Instability Hypothesis: an empirical investigation for the US economy (1970–2014)

2019 ◽  
Vol 43 (6) ◽  
pp. 1499-1523 ◽  
Author(s):  
Ítalo Pedrosa
Keyword(s):  
Empirical Investigation ◽  
Financial Fragility ◽  
Financial Instability ◽  
Positive Relation ◽  
Firm Level ◽  
Leverage Ratio ◽  
Us Economy ◽  
General Outcome ◽  
The Us

Abstract ‘There are many ‘Minskian’ interpretations of how financial fragility builds up reflecting the unsolved tensions regarding the transition from micro to macro results in Minsky’s Financial Instability Hypothesis (FIH).’ Using firm-level and macroeconomic data to comply with the variety of FIH’s interpretations, we empirically assess the relations between leverage and financial fragility in the US economy (1970–2014). To evaluate firms’ financial fragility, we deploy Minsky’s scale—from the financially sounder to the more fragile firms: hedge, speculative and Ponzi. The main findings are the following: (i) the evolution of the aggregate leverage ratio does not account for the systemic financial fragility, measured by the frequency of speculative and Ponzi firms, and (ii) within the biggest firms, the leverage has increased along with the incidence of hedge financing, and for the smallest firms group the opposite has happened. We conclude that a positive relation between leverage and financial fragility cannot be deemed to be a general outcome.

scholarly journals FINANCIAL LIBERALISATION, CREDIT RATIONING AND SLOW GROWTH IN MEXICO: TESTING THE MCKINNON-SHAW HYPOTHESIS

2009 ◽  
Vol 21 (39) ◽  
Author(s):  
Ignacio Perrotini Hernández
Keyword(s):  
Slow Growth ◽  
Credit Rationing ◽  
Interesting Case ◽  
Financial Fragility ◽  
Financial Instability ◽  
Long Run ◽  
Financial Liberalisation ◽  
Macroeconomic Effects

The Mexican experience with financial liberalisation provides an interesting case of study for countries facing financial instability problems. The aim of this paper is twofold: first, to provide an overview of the macroeconomic effects of the lending boom associated with Mexico's transition from a financially repressed regime to financial liberalisation. And second, to empirically assess whether the McKinnon-Shaw hypothesis holds in this case. It is argued that financial liberalisation tends to generate financial fragility, credit rationing and long-run slow growth.

scholarly journals Micro-prudentiality and financial stability

2012 ◽  
Author(s):  
Cristian Ionescu
Keyword(s):  
Financial Stability ◽  
Liquidity Risk ◽  
Financial Economic ◽  
Market Discipline ◽  
Macroeconomic Fluctuations ◽  
Financial Fragility ◽  
Social Aspects ◽  
Financial Instability ◽  
Basel Iii ◽  
High Degree

Given the high degree of importance of issues related to financial instability in modern economies, (financial, economic and social aspects), it is necessary the analysis of the microeconomic components that determine macroeconomic fluctuations, resulting in the visible financial instability. Thus, this paper aims to analyze the following aspects: financial fragility, as a measure of financial instability at the microeconomic level; micro-prudential regulation; microeconomic reform measures, which addresses problems related to capital, liquidity, risk management and supervision and market discipline. All these are integrated into the international Basel III framework of the Bank of International Settlements Regulations. In addition, the manner and the time of Basel III implementation of the capital and liquidity-related measures is very important. In addition, the paper aims to analyze the inter-connections and the compromises between capital and liquidity, trying to understand how the two are connected.

Psychiatric remuneration systems in Europe: an overview

2011 ◽  
Vol 08 (01) ◽  
pp. 09-15
Author(s):  
D. McDaid
Keyword(s):  
Mental Health ◽  
The Netherlands ◽  
Mental Health System ◽  
Psychiatric Care ◽  
Financial Instability ◽  
Service Utilisation ◽  
Service Users ◽  
Mental Health Systems ◽  
Adequate Information ◽  
Recent Developments

SummaryNew forms of psychiatric remuneration linked to levels of activity undoubtedly will have an increasing role to play in mental health systems right across Europe. Potentially they can be more efficient and promote choice, but valid concerns have been raised about their impact on the sustainability and nature of psychiatric care. This article looks in particular at recent developments in England and the Netherlands and reflects on how remuneration mechanisms may need to develop further both to improve efficiency and quality within the context of an ever more fragmented and multi-sectoral mental health system. Any introduction of activity- based reimbursement should be introduced gradually. This should be accompanied by investment in adequate information systems to help better understand service utilisation patterns, transitional funding safeguards to reduce the risk of financial instability and incentives/ contractual measures to ensure that services strive to offer services of the highest possible quality that meet the needs of service users.

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