- Brad Setser, Ioannis Halikias, Alexander Pitt, Christoph Rosenberg, Brett House, Jens Nystedt, and Christian Keller
- Published Date:
- October 2005
Debt-Related Vulnerabilities and Financial Crises An Application of the Balance Sheet Approach to Emerging Market Countries
Christoph Rosenberg, Ioannis Halikias, Brett House, Christian Keller,
Jens Nystedt, Alexander Pitt, and Brad Setser
INTERNATIONAL MONETARY FUND
© 2005 International Monetary Fund
Production: IMF Multimedia Services Division
Typesetting: Alicia Etchebarne-Bourdin
Debt-related vulnerabilities and financial crises: an application of the balance sheet approach to emerging market countries/Christoph Rosenberg … [et al.]—Washington, D.C.: International Monetary Fund, 2005.
p. cm.—(Occasional paper; no. 240)
Includes bibliographical references.
1. Financial statements—Developing countries. 2. Financial statements—Developing countries—Statistics. 3. Financial crises—Developing countries. I. Rosenberg, Christoph B. II. Occasional paper (International Monetary Fund); no. 240.
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The following symbols have been used throughout this paper:
… to indicate that data are not available;
— to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;
– between years or months (e.g., 2003–04 or January–June) to indicate the years or months covered, including the beginning and ending years or months;
/ between years (e.g., 2003/04) to indicate a fiscal (financial) year.
“n.a.” means not applicable.
“Billion” means a thousand million.
Minor discrepancies between constituent figures and totals are due to rounding.
The term “country,” as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.
The analysis of currency and maturity mismatches in sectoral balance sheets is increasingly becoming a regular element in the IMF’s toolkit for surveillance in emerging market countries. This paper describes this so-called balance sheet approach and shows how it can be applied to detect vulnerabilities and shape policy advice. It also provides a broad-brush overview of how balance sheet vulnerabilities have evolved over the past decade and presents a number of case studies.
This study is derived from several papers prepared for the IMF’s Executive Board, starting with “The Balance Sheet Approach to Financial Crisis” (IMF Working Paper No. 02/210). The project was initiated by Mark Allen, Director of the IMF’s Policy Development and Review Department, who—along with Juha Kähkönen—provided general direction. The team that drafted this and the previous paper was led by Christoph Rosenberg and included Ioannis Halikias, Brett House, Christian Keller, Jens Nystedt, Alexander Pitt, and Brad Setser. At various stages, the project has benefited from comments by the IMF’s Executive Board, management, various departments, and participants in several seminars organized by the European Central Bank, the Bank of England, the Bank of Canada, the IMF Institute, the Asia and Pacific Department, and the Policy Development and Review Department. In particular, the authors would like to acknowledge the contributions of Nouriel Roubini (who coauthored the earlier working paper), as well as Matthew Fisher, Olivier Jeanne, Leslie Lipschitz, Christian Mulder, Alan MacArthur, and Jeromin Zettelmeyer. Invaluable research assistance was provided by Rich Kelly and Gely Economopoulos. Esha Ray of the External Relations Department edited the paper and coordinated the production and publication.
The opinions expressed in the paper are those of the authors, and do not necessarily reflect the views of country authorities, the IMF, or IMF Executive Directors.