BIS paper weighs up early-warning indicators

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A Bank for International Settlements (BIS) working paper, released yesterday, constructs a new method for evaluating early-warning indicators of banking crises, and finds the credit-to-GDP gap and the debt service ratio "consistently outperform other measures".

Evaluating Early Warning Indicators of Banking Crises: Satisfying Policy Requirements, by Mathias Drehmann and Mikael Juselius, acknowledges that one objective of macro-prudential policy is to address the procyclicality of the financial

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