Did the #Irish Central Bank provide sovereign guarantees to buyers of Irish Bank Bonds and other contractual debt liabilities classified as fixed income securities, before the #GFC struck?
I asked this question after watching Professor Kelly on YouTube.
He was describing how the #Irish Central Bank allowed banks to import capital in large sums, and later lend it out to housing finance borrowers.
That created a severe #ALM Mismatch, as homes are not liquid assets.
He was describing how the #Irish Central Bank allowed banks to import capital in large sums, and later lend it out to housing finance borrowers.
That created a severe #ALM Mismatch, as homes are not liquid assets.
Only after the #GFC, did the Irish and other banks realize that a run on the #deposits could lead to financial #insolvency.
#Ruin #Risk by definition is the gap between Unexpected #Loss and Expected Loss.
As the gap increases, the chances of financial ruin and #default rises too!
#Ruin #Risk by definition is the gap between Unexpected #Loss and Expected Loss.
As the gap increases, the chances of financial ruin and #default rises too!
There is a technical difference b/w Ruin Risk & Expected Shortfall.
I wouldn't touch that for the moment.
This thread is not about risk modelling.
Both are computed differently!
Run-on #bank deposits is like a #claim event faced by Insurance firms.
If MVL>MVA=>DEFAULT
I wouldn't touch that for the moment.
This thread is not about risk modelling.
Both are computed differently!
Run-on #bank deposits is like a #claim event faced by Insurance firms.
If MVL>MVA=>DEFAULT
Most of the economic boom & bust epochs witnessed in the major economies can be described as #cyclical credit booms and busts.
Banks need to stress test the ALM Mismatches to analyze the impact on CAR Capital Adequacy Ratio, with a rise in MVL or fall in MVA and effects on MVE.
Banks need to stress test the ALM Mismatches to analyze the impact on CAR Capital Adequacy Ratio, with a rise in MVL or fall in MVA and effects on MVE.
MVA is Market Value of Assets
MVL is Market Value of Liabilities
MVE is Market Value of Equity
MVL is Market Value of Liabilities
MVE is Market Value of Equity
I was watching this video.
A bit outdated now, but, presents an important presentation of Systemic Risk and Regulation of Banking from an Irish perspective.
Makes up good listening for Economic Historians.
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