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The determinants of banking crises: Further evidence

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  • Peña, Guillermo

Abstract

This paper employs a new dataset of 36 EU and OECD countries for the period 1961–2012 to test the importance of economic inequality in banking crises and to find new determinants of them. We estimated a panel logit model with population-averaged results, capturing the most relevant crisis determinants in the literature. By analyzing the impact of inequality on the risk of a banking crisis, we found a new transmission channel of inequality to a financial recession via deficit and obtained a significant and robust positive impact of inequality on the bank crisis probability. We also found evidence that distance to USA, France and Japan decreases the likelihood of a financial crisis. Finally, and contrary to the theory, we found a new determinant that increases the likelihood of a crisis: the accumulated experience of VAT.

Suggested Citation

  • Peña, Guillermo, 2016. "The determinants of banking crises: Further evidence," MPRA Paper 70093, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:70093
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    References listed on IDEAS

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    11. Claessens, Stijn & Perotti, Enrico, 2007. "Finance and inequality: Channels and evidence," Journal of Comparative Economics, Elsevier, vol. 35(4), pages 748-773, December.
    12. Büyükkarabacak, Berrak & Valev, Neven T., 2010. "The role of household and business credit in banking crises," Journal of Banking & Finance, Elsevier, vol. 34(6), pages 1247-1256, June.
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    Cited by:

    1. Guillermo Peña, 2017. "Money, Lending and Banking Crises," Economic Papers, The Economic Society of Australia, vol. 36(4), pages 444-458, December.

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    More about this item

    Keywords

    Banking Crisis; Inequality; Geographical Distance; VAT experience; Post-Keynesian Economics;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • G01 - Financial Economics - - General - - - Financial Crises
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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