Resilience and Stability of Algeria’s Financial System towards – Resilience versus Stability - Approach
Salima Guettafi, Yassine Laib

In the absence of a consensus on measuring Financial Stability. This research presents an attempt to construct a composite Financial Stability Index (FStI) for the Algerian financial system, which covers three composites indexes, represented by: the IMF’s Financial Soundness Indicators (FSIs), the Financial Resilience Indicators (FRIs), and the Macroeconomic Resilience Indicators (MRIs). The novelty of the research resides in seeking the development of the – Resilience versus Stability- approach, by analyzing the evolution of and the relationship between the aforementioned composites indexes, their interactions, and their effects; and by ascertaining which one has more effects on the Financial Stability situation through Algeria’s FStI. As a result, it has been concluded that FSIs and FRIs could reflect the Financial Stability situation unlike to MRIs that affect the financial system inversely and leads to the Financial Instability. However, it is worth noting that FRIs could better reflect the Financial Stability situation rather than FSIs which are mostly regulated. Therefore, to maintain Financial Stability, a certain level of Financial Resilience should be achieved. Particularly, Algeria should maintain its Financial Soundness, promote its Resilience be it financial or macroeconomic, and pay more attention and keep the former one.

Full Text: PDF     DOI: 10.15640/jeds.v4n1a8