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Determinants of the real impact of banking crises: A review and new evidence

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  • Wilms, Philip
  • Swank, Job
  • de Haan, Jakob

Abstract

We examine which variables are robust in explaining cross-country differences in the real costs of banking crises. We identify 21 variables frequently used as determinants of the severity of banking crises. After a discussion of five measures based on cumulative output (or output growth) lost after a banking crisis, we examine the drivers of the real impact of banking crises for two preferred measures. Our results suggest that fixed investment and financial openness affect losses in output levels, while fixed investment, the current account balance, liquidity support, monetary policy and financial freedom affect losses in output growth after banking crises.

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  • Wilms, Philip & Swank, Job & de Haan, Jakob, 2018. "Determinants of the real impact of banking crises: A review and new evidence," The North American Journal of Economics and Finance, Elsevier, vol. 43(C), pages 54-70.
    • Handle: RePEc:eee:ecofin:v:43:y:2018:i:c:p:54-70
    DOI: 10.1016/j.najef.2017.10.005
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    6. Marc Sanchez-Roger & María Dolores Oliver-Alfonso & Carlos Sanchís-Pedregosa, 2019. "Fuzzy Logic and Its Uses in Finance: A Systematic Review Exploring Its Potential to Deal with Banking Crises," Mathematics, MDPI, vol. 7(11), pages 1-22, November.
    7. M. Ayhan Kose & Franziska Ohnsorge, 2023. "Slowing Growth: More Than a Rough Patch," CAMA Working Papers 2023-23, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    8. Cuadros-Solas, Pedro Jesús & Salvador Muñoz, Carlos, 2022. "Disentangling the sources of sovereign rating adjustments: An examination of changes in rating policies following the GFC," Research in International Business and Finance, Elsevier, vol. 59(C).
    9. Mathonnat, Clément & Williams, Benjamin, 2020. "Does more finance mean more inequality in times of crisis?," Economic Systems, Elsevier, vol. 44(4).
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    12. Jan Kakes & Rob Nijskens, 2018. "Size of the banking sector: implications for financial stability," DNB Occasional Studies 1606, Netherlands Central Bank, Research Department.

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    More about this item

    Keywords

    Banking crises; Real impact of crises; Output loss due to crises;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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