The third set contains indicators of interconnectedness that capture cross-section risks by focusing on common exposures and interconnectedness between countries, sectors of the economy, or financial institutions. For instance, payments system data can be used to assess tensions in the network of interbank transactions. 2.2.2  Housing market indicators  Many, if not most, severe financial crises have been related to reckless property lending.
Bordo and Jeanne (2002) study 15 advanced economies – Australia, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, Norway, Spain, Sweden, the UK and the US – over the period 1970–2002. They identified 20 episodes of housing booms, of which 11 were followed by a bust. Of these 11 boom-bust cycles, 6 experienced banking crises.