Banking Sector Strenght and the Transmission of Currency Crises
AbstractWe show that, complementary to trade and financial linkages, the strength of the banking sector helps explain the transmission of currency crises. Specifically, we demonstrate that the Mexican, Thai, and Russian crises predominantly spread to countries with weaknesses in their banking sectors. At the same time, the role of banking sector strength varies per crisis; where the Mexican crisis spread to countries with a strong presence of foreign banks in domestic credit provision, the Thai crisis disproportionately contaminated countries where the banking sector was most sensitive to currency realignments, while the Russian crisis spread to countries with inefficiencies in the banking sector.
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Bibliographic InfoPaper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 032.
Date of creation: Apr 2005
Date of revision:
Banking Sector Strength; Currency Crisis; Transmission Channels.;
Other versions of this item:
- Bruinshoofd,Allard & Candelon,Bertrand & Raabe,Katharina, 2005. "Banking Sector Strength and the Transmission of Currency Crises," Research Memoranda 023, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization.
- F30 - International Economics - - International Finance - - - General
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-04-16 (All new papers)
- NEP-CWA-2005-04-16 (Central & Western Asia)
- NEP-MON-2005-04-16 (Monetary Economics)
- NEP-SEA-2005-04-16 (South East Asia)
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