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How to Reduce the Risk Of Banking Problems

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  • Deabes, Tosson

Abstract

This paper reviews the existing evidence on the origins of banking crises, provides new results on the impact of government bank ownership on financial stability, and discusses policy options that can prevent and mitigate the consequences of banking crises. We find that government ownership of banks increases the likelihood and fiscal cost of crises; albeit the latter result is weak. Among the policies recommended to minimize the occurrence of crises, we highlight the importance of sound macroeconomic policies, adequate financial infrastructure, incentive compatible regulations, and limiting government interference in the banking sector.

Suggested Citation

  • Deabes, Tosson, 2003. "How to Reduce the Risk Of Banking Problems," MPRA Paper 3054, University Library of Munich, Germany, revised Nov 2003.
    • Handle: RePEc:pra:mprapa:3054
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    File URL: https://mpra.ub.uni-muenchen.de/3054/1/MPRA_paper_3054.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    macroeconomics; financial infrastructure; financial stability;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines

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