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Managing Non-Core Liabilities and Leverage of the Banking System :, A Building Block for Macroprudential Policy Making in Korea, Ali Alichi, Cheol Hong, Sang Chul Ryoo

Korea has been active in implementing targeted macroprudential policies to address specific financial stability concerns. In this paper, we develop a conceptual model that could serve as a building block for the broader framework of macroprudential policy making in Korea. It is assumed that the policy maker imposes taxes on key aggregate financial ratios in the banking system to mitigate excessive leverage over the economic cycle. The model is calibrated for Korea. The results illustrate how countercyclical tools, such as simple taxes on key financial ratios, could be incorporated to enrich the broader macroprudential policy framework in the Korean context
Table Of Contents
Cover; Contents; I. Introduction; II. Banking System's and Macroprudential Policy Maker's Problems; A. Banking System's Problem; B. MPM's Problem; III. Model with Direct Capital Constraint; A. Banking System's Problem; B. MPM's Problem; IV. Simulations; V. Conclusion; Figures; 1. Korea: Macroprudential Model Simulations, 2002-2010; 2. Korea: Simulations versus Actual Data, 2002-2010; 3 Korea: Macroprudential Model Simulations, 2002-2010; Table; 1. Baseline Parameter Values; References
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (22 p.)
Specific Material Designation
Form Of Item

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