Identifying Systematically Important Financial Institutions

Abderezak Abdurehman
2015 unpublished
The advent of the recent financial crisis has signalled the importance of having a total picture of the overall financial system instead of earlier focus by academicians and policy makers on individual banks. This new approach is termed as the Macro-prudential perspective and tries to understand the interconnectedness of financial institutions as well the effect of pro-cyclicality (the tendency for problems to be hidden during boom and exposed during crisis) to the financial system and the
more » ... system and the overall economy. Such totalitarian approach needs an effective system to identify those financial institutions with the capacity to distract the operations of financial markets or with the ability to breakdown the entire financial system. This paper is aimed at analysing related literatures that try to provide a workable framework on identifying such institutions. It covers tools and techniques employed by academicians as well as policy makers, in identifying SIFI.