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Real effects of banking crises: Imports of capital goods by developing countries

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  • Nektarios A. Michail
  • Andreas Savvides

Abstract

We examine the hypothesis that banking crises have real effects on developing economies by reducing imports of capital goods. We test this hypothesis by estimating a model for the determinants of imports of capital goods by a panel of developing economies during 1961 to 2010. Our results suggest that not only do banking crises have statistically significant and economically important effects on imports of capital goods, but these effects increase the longer a banking crisis lasts. Imports of capital goods are a critical component of the capital stock and the production process in developing economies and, thus, our results highlight one important channel through which banking crises may hamper the growth prospects of these economies.

Suggested Citation

  • Nektarios A. Michail & Andreas Savvides, 2018. "Real effects of banking crises: Imports of capital goods by developing countries," Review of Development Economics, Wiley Blackwell, vol. 22(3), pages 1343-1359, August.
  • Handle: RePEc:bla:rdevec:v:22:y:2018:i:3:p:1343-1359
    DOI: 10.1111/rode.12399
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    Cited by:

    1. Chen, Ji & Wu, Liudan & Hao, Lili & Yu, Xiao & Streimikiene, Dalia, 2024. "Does the import of green products encourage green technology innovation? Empirical evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    2. Nektarios A. Michail & Konstantinos D. Melas & Dimitris Batzilis, 2021. "Container shipping trade and real GDP growth: A panel vector autoregressive approach," Economics Bulletin, AccessEcon, vol. 41(2), pages 304-315.
    3. Xiaoshi Zhou & Wanglin Ma, 2021. "Does agricultural mechanization reduce vulnerable employment? Evidence from cross-country panel data," Economics Bulletin, AccessEcon, vol. 41(2), pages 294-303.
    4. Nektarios A. Michail, 2021. "The impact of conflict on the exchange rate of developing economies," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 916-930, May.

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