Ending Over-Lending is possible.

Ending Over-Lending: Assessing Systemic Risk with Debt to Cash Flow

The latest generation of Ending Over-Lending research was recently published as a European Central Bank Working Paper. Read the paper here. The paper introduces the debt to cash flow ratio to macro-prudential analysis as an indicator of systemic risk and vulnerabilities to financial instability. The debt to cash flow approach is then quantitatively tested and shown to be a useful measure of vulnerability to banking and sovereign crises which performs as well as, or better than, conventional indicators (debt/GDP, credit gaps).

Ending Over-Lending is a collaborative research and education project developed by Bruce A. Ramsay, a financial instability researcher based in Canada and the Netherlands.

Ending Over-Lending advocates the use of cash flow analysis to assess the financial stability of nations.