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Regular version of the site

Challenges for Emerging Economy II

Event ended

Second summer program in Armenia invites rising scholars to attend classes in mid July.

Honor Lecture 

Prudential policy and systemic risk: the role of interconnections 

Madina Karamysheva
Assistant Professor

Abstract: The impact of prudential policies in open economies depends not only on their intrinsic efficacy but also on the feedback of the policy through close financial partners. Using a dataset of advanced countries, we find that prudential policy measures reduce systemic risk in the financial system in the 2000-2014 time period.

We show that indirect effect in case of uniform interventions enforces the direct one and accounts for up to 87% of total risk reduction. The policies though remain insignificant for GIIPS countries which stay dependent on actions and responses of their financial counterparties.