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An Indicator of the Financial Cycle in the Czech Economy

In: CNB Financial Stability Report 2013/2014

Author

Listed:
  • Miroslav Plasil
  • Jakub Seidler
  • Petr Hlavac
  • Tomas Konecny

Abstract

This article describes a method for assessing the position of the Czech economy in the financial cycle. On the basis of selected variables tracking risks in the financial sector and the real economy, we construct an indicator aimed at signalling the emergence of future problems in timely fashion. The results show that the indicator is able to capture the individual phases of the financial cycle and predict the size of the banking sector’s future loan losses six quarters ahead. Assessing the current position of the Czech economy in the financial cycle is a necessary condition for proper macroprudential policy-making and especially for setting the countercyclical capital buffer.

Suggested Citation

  • Miroslav Plasil & Jakub Seidler & Petr Hlavac & Tomas Konecny, 2014. "An Indicator of the Financial Cycle in the Czech Economy," Occasional Publications - Chapters in Edited Volumes, in: CNB Financial Stability Report 2013/2014, chapter 0, pages 118-127, Czech National Bank.
    • Handle: RePEc:cnb:ocpubc:fsr1314/1
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    References listed on IDEAS

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    Cited by:

    1. David Martinez-Miera & Rafael Repullo, 2019. "Monetary Policy, Macroprudential Policy, and Financial Stability," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 809-832, August.
    2. Malovaná, Simona & Frait, Jan, 2017. "Monetary policy and macroprudential policy: Rivals or teammates?," Journal of Financial Stability, Elsevier, vol. 32(C), pages 1-16.
    3. Jiri Gregor, 2024. "A Stress Test Approach to the Calibration of Borrower-Based Measures: A Case Study of the Czech Republic," Working Papers 2024/2, Czech National Bank.

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