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Banking Crises and Short and Medium Term Output Losses in Emerging and Developing Countries: The Role of Structural and Policy Variables

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  • Furceri, Davide
  • Zdzienicka, Aleksandra

Abstract

The aim of this paper is to assess the dynamic impact of banking crises on output for a panel of developing economies. Using an unbalanced panel of 159 countries from 1970 to 2006, the paper shows that banking crises produce significant output losses. Output losses are larger for relatively richer economies, characterized by a higher level of financial deepening and larger current account imbalances. Flexible exchange rates, fiscal and monetary policy, and liquidity support policies have been found to attenuate the effect of the crises.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 40 (2012)
Issue (Month): 12 ()
Pages: 2369-2378

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Handle: RePEc:eee:wdevel:v:40:y:2012:i:12:p:2369-2378

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Web page: http://www.elsevier.com/locate/worlddev

Related research

Keywords: output losses; financial crisis; developing countries; emerging economies;

References

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Cited by:
  1. Bernal-Verdugo, Lorenzo E. & Furceri, Davide & Guillaume, Dominique, 2013. "Banking crises, labor reforms, and unemployment," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1202-1219.

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