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Asia proved to be remarkably resilient in the face of the global financial crisis, but why was its output performance stronger than that of other regions? The paper shows that better initial conditions—in the form of lower external and financial vulnerabilities—contributed significantly to Asia’s resilience. Key pre-crisis factors included moderate credit expansion, reliance on deposit funding, enhanced bank asset quality, reduced external financing, and improved current accounts. These improvements reflected the lessons from the Asian financial crisis in the late 1990s, which helped reshape both public policies and private sector behavior. For example, several countries stepped up their use of macroprudential policies, well before they were recognized as an essential component of the financial stability toolkit. They also overhauled financial regulations and strengthened oversight of financial institutions, which helped reduce risk-taking by households and firms before the global financial crisis. Looking ahead, Asia is in the process of adjusting to more volatile external conditions and higher risk premiums. By drawing the right lessons from its pre-crisis experiences, Asia’s economies will be better equipped to address new risks associated with increased cross-border capital flows and greater integration with the rest of the world.

Financial crises --- Resilience (Personality trait) --- Human resilience --- Resiliency (Personality trait) --- Personality --- Banks and Banking --- Exports and Imports --- Financial Risk Management --- Macroeconomics --- Money and Monetary Policy --- Financial Crises --- Financial Markets and the Macroeconomy --- Current Account Adjustment --- Short-term Capital Movements --- Economic History: Financial Markets and Institutions: Asia including Middle East --- International Lending and Debt Problems --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Monetary Policy --- International economics --- Economic & financial crises & disasters --- Monetary economics --- Banking --- External debt --- Credit --- International reserves --- Global financial crisis of 2008-2009 --- Money --- Central banks --- Debts, External --- Foreign exchange reserves --- Global Financial Crisis, 2008-2009 --- New Zealand

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The global financial crisis has underscored the importance of understanding macro-financial developments and spillovers in an increasingly interconnected and intricate system. At the IMF, staff is focusing on the linkages between the real economy and the financial sector, as well as the inter-relationships between global and individual-country risks. The Country Financial Stability Map provides an empirical framework for explicitly linking these various aspects of the IMF’s surveillance of its member countries. It identifies potential sources of macro-financial risks particular to a country and also enables an assessment of these risks in a global context through comparisons with the corresponding Global Financial Stability Map from the Global Financial Stability Report. The authors have developed an Excel-based tool (“Ms. Muffet”) to facilitate this analysis, which may be replicated by external users with access to the necessary databases, using the accompanying template.

International finance. --- Financial risk. --- Financial risk --- Business risk (Finance) --- Money risk (Finance) --- Risk --- International monetary system --- International money --- Finance --- International economic relations --- Econometric models. --- Banks and Banking --- Finance: General --- Macroeconomics --- Financing Policy --- Financial Risk and Risk Management --- Capital and Ownership Structure --- Value of Firms --- Goodwill --- General Financial Markets: Government Policy and Regulation --- Financial Crises --- Financial services law & regulation --- Economic & financial crises & disasters --- Financial sector stability --- Global financial crisis of 2008-2009 --- Credit risk --- Market risk --- Liquidity risk --- Financial sector policy and analysis --- Financial crises --- Financial regulation and supervision --- Financial risk management --- Financial services industry --- Global Financial Crisis, 2008-2009 --- United States

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This paper analyzes cross-border macrofinancial spillovers from a variety of macroprudential policy measures, using a range of quantitative methods. Event study and panel regression analyses find that liquidity and sectoral macroprudential policy measures often affect cross-border bank credit, whereas capital measures do not. This empirical evidence is stronger for tightening than for loosening measures, is distributed across credit leakage and reallocation effects, and is generally regionally concentrated. Consistently, structural model based simulation analysis indicates that output and bank credit spillovers from sectoral macroprudential policy shocks are generally small worldwide, but are regionally concentrated and economically significant for countries connected by strong trade or financial linkages. This simulation analysis also indicates that countercyclical capital buffer adjustments have the potential to generate sizeable regional spillovers.

Financial risk management --- Macroeconomics --- Economics --- Risk management --- E-books --- Financial risk management. --- Macroeconomics. --- Banks and Banking --- Money and Monetary Policy --- International Policy Coordination and Transmission --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- Financial Markets and the Macroeconomy --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- International Lending and Debt Problems --- Externalities --- Monetary economics --- Banking --- Macroprudential policy --- Bank credit --- Macroprudential policy instruments --- Cross-border banking --- Spillovers --- Financial sector policy and analysis --- Money --- Financial services --- Economic policy --- Credit --- International finance --- Sweden