Bank Fragility and International Capital Mobility
AbstractThe paper examines the effects of increased financial integration on the economy and, specifically, the welfare of depositors and the business sector. A simple model of a small open economy with a fragile banking sector and imperfect capital mobility is developed. Increased international integration of the market for bank deposits makes runs on banks more likely and unambiguously hurts the domestic business sector. Depositors may gain or lose depending on the parameters. Even when depositors gain, the overall effect on the economy depends on the size of foreign assets held relative to the costs of bank crises.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 99/113.
Date of creation: 01 Aug 1999
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Postal: International Monetary Fund, Washington, DC USA
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Other versions of this item:
- Detragiache, Enrica, 2001. "Bank Fragility and International Capital Mobility," Review of International Economics, Wiley Blackwell, Wiley Blackwell, vol. 9(4), pages 673-87, November.
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- De Vries, C.G., 2005.
"The simple economics of bank fragility,"
Journal of Banking & Finance, Elsevier,
Elsevier, vol. 29(4), pages 803-825, April.
- C.G. de vries, 2004. "The simple economics of bank fragility," WO Research Memoranda (discontinued), Netherlands Central Bank, Research Department 755, Netherlands Central Bank, Research Department.
- Eric Santor, 2003. "Banking Crises and Contagion: Empirical Evidence," Working Papers, Bank of Canada 03-1, Bank of Canada.
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