Pro-Cyclicality - Discussion of the problem and possible solutions

Tuesday, May 6th, 2008

How to define pro-cyclicality Procyclicality is used in the context of discussing the effects of Basel II on the financial system. A simplified definition of pro-cyclicality is: International rules have encouraged banks to act more aggressively when the economic cycle is in the middle of an upswing, when some argue that is ...

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Concepts and Measurement of Risk - Article by Borio, Furfine, Lowe

Sunday, May 4th, 2008

Claudio Borio, Craig Furfine and Philip Lowe discuss concepts of risks in their article "Pro-cyclicality of the financial system and financial stability: issues and policy options": They distinguish several types of risk: expected and unexpected losses (in the statistical sense) “Expected losses” refer to the average or mean losses anticipated over a particular ...

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