What drives financial crises in emerging markets?
AbstractThe study examines the reasons for financial crises in 31 emerging market countries during 1980-2001. It estimates a probit model using 23 macroeconomic and financial sector variables. Traditional variables such as unemployment and inflation, as well as several indicators of indebtedness such as private sector liabilities and the foreign liabilities of banks explain currency crises rather well, and it appears currency crises occur in tandem with banking crises. Indeed, in emerging market countries vulnerability to crisis is exacerbated by situations involving large liabilities that permit sudden capital outflows. Increases in indebtedness followed the liberalisation of capital flows and domestic financial sectors.
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Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0304010.
Length: 30 pages
Date of creation: 28 Apr 2003
Date of revision:
Note: Type of Document - pdf; prepared on IBM PC ; to print on HP/PostScript/Franciscan monk; pages: 30 ; figures: included
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currency crises; banking crises; emerging markets; liberalisation; probit model;
Find related papers by JEL classification:
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-05-08 (All new papers)
- NEP-CWA-2003-05-08 (Central & Western Asia)
- NEP-FIN-2003-05-08 (Finance)
- NEP-IFN-2003-05-08 (International Finance)
- NEP-RMG-2003-05-08 (Risk Management)
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