Beyond investments in developing analytical tools and models that can provide early warnings of the build-up of financial imbalances at the aggregated level, efforts have also gone in the direction of the analysis of individual banks.
Methodologies combining bank-specific indicators, in the spirit of the CAMELS indicators, with country-specific indicators for the banking sector and country-specific macro-financial indicators are being used and will be further explored to predict distress in banks.7 In this respect, model-based frameworks of contagion accounting for vulnerabilities arising from interdependencies across banks are also being developed.