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What is Financial Stability

Handbook of Research on Strategic Developments and Regulatory Practice in Global Finance
Financial stability refers to the resistance of the financial system’s functioning against shocks.
Published in Chapter:
How to Measure the Level of Financial Development
Sibel Bali Eryigit (Uludağ University, Turkey) and Ercan Dulgeroglu (Uludağ University, Turkey)
DOI: 10.4018/978-1-4666-7288-8.ch017
Abstract
The aim of this chapter is twofold: first, to present in the most proper manner the definition of financial development, considering that bad definition leads to bad measurement and taking into account the discussions in the literature. Second, it aims to discuss how to measure the level of financial development. In line with these objectives, financial development index values for 1998-2011 are calculated by principal components analysis for 77 countries considering the suitable indicator in terms of the right definition of financial development. The calculated indices helps to obtain a composite measure that evaluates the size, access, efficiency and stability dimensions of financial development together.
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The Economic and Social Value of Financial Literacy
The absence of crises in the various groups of institutions and markets and the stable evolution of the main monetary and financial macro magnitudes (monetary supply, credit supply, interest rates, etc.).
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The Effects of Macroprudential Policies on Financial Stability in Developing Countries
A condition in which financial system as a whole is flexible that the financial institutional system is resistant to economic shocks and fulfill their main functions properly.
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