WP/12/04 Threats to Financial and Macroeconomic Stability in Belarus: Systemic Risk Accumulation in the Banking Sector
This paper analyzes the systemic risk in the time dimension as a threat to macroeconomic stability in Belarus. It shows that specific features of the Belarusian banking system and its regulation cause a number of peculiarities in the interaction of the cyclical behavior of GDP and the credit supply by the banking sector. The above peculiar features are an additional justification for expectations of the significant effect of procyclicality in the interaction of the banking and real sectors of the economy. The corresponding hypothesis testing can formally confirm the presence of this effect in Belarus. Potential systemic risk in 2011 was probably not fully realized due to the partial neutralization of this potential by inflationary and devaluation processes. The prerequisites for this effect remain in the short and medium term, which can be limited by the preventive regulatory policies.