01922cas a2200253 a 4500 AALejournalIMF006054 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451873450 1018-5941 BD-DhAAL BD-DhAAL Maechler, Andrea. The Real Effects of Financial Sector Risk / Andrea Maechler, Alexander Tieman. Washington, D.C. : International Monetary Fund, 2009. 1 online resource (32 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper estimates the magnitude of key effects on the real economy from financial sector stress. We focus on the short-run feedback effect from market-based indicators of financial sector risk to the real economy through the credit channel, and estimate this effect on an economy-wide (macro) level, as well as on the level of individual large banks. Both estimates yield significant feedback effects of substantial magnitude. The estimates are consistent with other work in this area. Our results suggest that prudential supervision could be enhanced by taking into account the feedback effects of financial instability in the real economy. We also propose a way to integrate feedback effects into stress tests in order to improve realism and accuracy or macroeconomic stress scenarios, as well as a metric to interpret stress testing results. Mode of access: Internet Tieman, Alexander. IMF Working Papers; Working Paper ; No. 2009/198 Full text available on IMF http://elibrary.imf.org/view/journals/001/2009/198/001.2009.issue-198-en.xml IMF e-Library