changes in fundamentals [31,34]. Crockett (1997) Financial stability i s characterized b y no serious disturbances and an absence of financial crises in the economy of a country . Fidrmuc & Schardax (2000) Financial stability is linked to the shared responsibility of various entities . Icard (2002) Financial stability is a situation characterized by these three basic criteria: (1) some important set of financial asset prices seem to diverge sharply from fundamentals; (2) market functioning and credit availability, domestically and perhaps internationally, are significantly distorted; (3) aggregate spending deviates (or is likely to deviate) significantly, either above or below, from the economy’s ability to produce . Ferguson (2002 ) We deal with financial stability when met w ith four conditions: (1) monetary stability takes place, (2) the level of employment in the economy is close to the natural level, (3) there is confidence in the operation of key financial institutions and markets in the economy, and (4) there are no movements in Foot (2003)
Sustainability 2019 , 11 , 5604 5 of 38 the prices of financial and non-financial assets, which would undermine the fulfillment of the first two conditions . Financial stability is defined in terms of its ability to facilitate and enhance economic processes, manage risks, and absorb shocks. Moreover, financial stability is considered a continuum: changeable over time and consistent with multiple combinations of the constituent elements of finance . Schinasi (2004) For mature financial systems, the financial stability challenge can be characterized as maintaining the smooth functioning of the financial system and its ability to facilitate and support the efficient functioning and performance of the economy . Schinasi (2009) Financial stability reflects the ability of the financial system to consistently supply the credit intermediation and payment services that are needed in the real economy if it is to continue on its growth path . Rosengren (2011) Source: own elaboration. The concept of financial stability is also determined by central banks, which often assess financial stability for their reports and are responsible for its monitoring. Analysis of the definition and development of approaches to the understanding of financial system stability, as discussed by central banks, indicates the following [41–44]: • A stable financial system is capable of efficiently allocating resources, assessing and managing financial risks, maintaining employment levels close to the economy’s natural rate, and eliminating relative price movements of real or financial assets that will affect monetary stability or employment levels. • The financial sector performs its functions in a continuous and effective manner, even in the case of unexpected and unfavorable disturbances of significant scale.