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Explaining bank distress in Eastern European transition economies

  • Männasoo, Kadri
  • Mayes, David G.

This paper considers the joint role of macroeconomic, structural and bank-specific factors in explaining the occurrence of banking problems in the nineteen Eastern European transition countries over the last decade. With data at the individual bank level we show, using a discrete time survival model, that all three factors interact in their impact and have a rich dynamic profile, which underlines the highly volatile cycles challenging the stability of banks in this region. A fragile funding basis accompanied by high exposure to market risk in an environment of reforms and macroeconomic disturbances is the typical precursor of bank distress.

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Article provided by Elsevier in its journal Journal of Banking & Finance.

Volume (Year): 33 (2009)
Issue (Month): 2 (February)
Pages: 244-253

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Handle: RePEc:eee:jbfina:v:33:y:2009:i:2:p:244-253
Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

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