A Generalized Framework for the Assessment of Household Financial Vulnerability
A Generalized Framework for the Assessment of Household Financial Vulnerability

Author: Mindaugas Leika

Publisher: International Monetary Fund

Published: 2017-11-07

Total Pages: 56

ISBN-13: 1484326792

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Household financial fragility has received considerable attention following the global financial crisis, but substantial gaps remain in the analytical underpinnings of household financial vulnerability assessment, as well as in data availability. This paper aims at integrating the contributions in the literature in a coherent fashion. The study proposes also analytical and estimation extensions aimed at improving the quality of estimates and allowing the assessment of household financial vulnerability in presence of data limitations. The result of this effort is a comprehensive framework, that has wide applicability to both advanced and developing economies. For illustrative purposes the paper includes a detailed application to one developing country (Namibia).

Financial Vulnerability in Canada
Financial Vulnerability in Canada

Author: Jerry Buckland

Publisher: Springer Nature

Published: 2022-03-02

Total Pages: 191

ISBN-13: 3030925811

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This book examines financial vulnerability: a state in which a person or household cannot absorb any substantial spending or negative income shock without substantial financial and ultimately broader harm such as job loss, emotional harm, or mental illness. The focus of the book is on the experiences of low- income and modest income Canadian families – families which, by virtue of being in the lower income brackets, are particularly at risk of experiencing financial hardship. Looking at vulnerability from a conceptual and empirical lens, this book offers a framework to better understand the complex and interdependent ways in which financial vulnerability emerge and can be addressed. By locating its analysis of individual and household financial management in wider community, cultural, and economic contexts, this book seeks to offer holistic policy recommendations to reduce financial vulnerability, with implications that go beyond Canada and to other developed countries.

OECD Economic Survey of the United States: Key Research Findings
OECD Economic Survey of the United States: Key Research Findings

Author: OECD

Publisher: OECD Publishing

Published: 2019-01-08

Total Pages: 146

ISBN-13: 9264310274

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This volume collects four studies that were prepared as background research to the 2018 OECD Economic Survey of the United States. Using micro-data survey responses, regional and sectorial data, these studies seek to provide insights into employment responds to labour market disruption ...

What Drives Mortgage Default Risk in Europe and the U.S.?
What Drives Mortgage Default Risk in Europe and the U.S.?

Author: Mr. Marco Gross

Publisher: International Monetary Fund

Published: 2022-04

Total Pages: 38

ISBN-13:

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We present an analysis of the sensitivity of household mortgage probabilities of default (PDs) and loss given default (LGDs) on unemployment rates, house price growth, interest rates, and other drivers. A structural micro-macro simulation model is used to that end. It is anchored in the balance sheets and income-expense flow data from about 95,000 households and 230,000 household members from 21 EU countries and the U.S. We present country-specific nonlinear regressions based on the structural model simulation-implied relation between PDs and LGDs and their drivers. These can be used for macro scenario-conditional forecasting, without requiring the conduct of the micro simulation. We also present a policy counterfactual analysis of the responsiveness of mortgage PDs, LGDs, and bank capitalization conditional on adverse scenarios related to the COVID-19 pandemic across all countries. The economics of debt moratoria and guarantees are discussed against the background of the model-based analysis.

Namibia
Namibia

Author: International Monetary Fund. African Dept.

Publisher: International Monetary Fund

Published: 2016-12-08

Total Pages: 77

ISBN-13: 1475559070

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This 2016 Article IV Consultation highlights that Namibia has experienced remarkable growth and economic progress since the financial crisis. Strong policy frameworks and expansionary domestic policies have contributed to macroeconomic stability, robust growth, and rising living standards. Yet deep-rooted structural impediments have kept unemployment high and unresponsive to growth, contributing to persistently high inequality. The outlook remains positive with considerable vulnerabilities and risks. Growth is projected to temporarily weaken to 1.6 percent in 2016 as the construction of large mines ends and the government starts consolidating.

Sweden
Sweden

Author: International Monetary Fund. Monetary and Capital Markets Department

Publisher: International Monetary Fund

Published: 2016-11-17

Total Pages: 61

ISBN-13: 1475554613

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This paper discusses the findings of the Financial System Stability Assessment for Sweden. The Swedish financial system is large and highly interconnected, putting a premium on the accompanying policy framework. Relative to the size of the domestic economy, the financial system is among Europe’s largest. It features complex domestic and international linkages, reflecting Sweden’s role as a regional financial hub. However, the macrofinancial risks have grown since 2011, for example the rising share of highly indebted households. Stress tests also suggest that banks and nonbanks are largely resilient to solvency shocks, but concerns persist about the ability of bank models to capture unexpected losses.

Assessing Macro-Financial Risks of Household Debt in China
Assessing Macro-Financial Risks of Household Debt in China

Author: Mr.Fei Han

Publisher: International Monetary Fund

Published: 2019-11-27

Total Pages: 25

ISBN-13: 1513522353

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High household indebtedness could constrain future consumption growth and increase financial stability risks. This paper uses household survey data to analyze both macroeconomic and finanical stability risks from the rapidly rising household debt in China. We find that rising household indebtedness could boost consumption in the short term, while reducing it in the medium-to-long term. By stress testing households’ debt repayment capacity, we find that low-income households are most vulnerable to adverse income shocks which could lead to signficant defaults. Containing these risks would call for a strengthening of systemic risk assessment and macroprudential policies of the household sector. Other policies include improving the credit registry system and establishing a well-functioning personal insolvency framework.

Singapore
Singapore

Author: International Monetary Fund. Monetary and Capital Markets Department

Publisher: International Monetary Fund

Published: 2019-07-15

Total Pages: 103

ISBN-13: 1498325866

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This technical note Financial Stability Analysis and Stress Testing on Singapore contributes to the assessment of the stability and soundness of the financial sector with a comprehensive set of risk analyses. The work combines an examination of key risk indicators with detailed stress tests, which simulate the health of banks, insurers, nonfinancial corporates and households under severe yet plausible (counterfactual) adverse scenarios. Scenarios include global financial market turmoil, a major slowdown of economic activity in China, cyber-attacks and extreme flooding. The analyses include simulations of contagion within the international banking network, within the domestic banking system and between different types of financial institutions in the financial system. The stress tests reveal that the financial system is broadly resilient to severe adverse shocks; however, foreign exchange liquidity is a key vulnerability. The analyses suggest that Monetary Authority of Singapore should continue strengthening its surveillance by closing data gaps and developing its analytical tools. Further data collection on domestic interlinkages, household mortgage debt at the borrower level, insurers’ balance sheets would enhance surveillance.

Canada
Canada

Author: International Monetary Fund. Monetary and Capital Markets Department

Publisher: International Monetary Fund

Published: 2019-06-24

Total Pages: 85

ISBN-13: 1498321119

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This Financial System Stability Assessment paper discusses that Canada has enjoyed favorable macroeconomic outcomes over the past decades, and its vibrant financial system continues to grow robustly. However, macrofinancial vulnerabilities—notably, elevated household debt and housing market imbalances—remain substantial, posing financial stability concerns. Various parts of the financial system are directly exposed to the housing market and/or linked through housing finance. The financial system would be able to manage severe macrofinancial shocks. Major deposit-taking institutions would remain resilient, but mortgage insurers would need additional capital in a severe adverse scenario. Housing finance is broadly resilient, notwithstanding some weaknesses in the small non-prime mortgage lending segment. Although banks’ overall capital buffers are adequate, additional required capital for mortgage exposures, along with measures to increase risk-based differentiation in mortgage pricing, would be desirable. This would help ensure adequate through-the cycle buffers, improve mortgage risk-pricing, and limit procyclical effects induced by housing market corrections.