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Banking crises: An equal opportunity menace

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  • Reinhart, Carmen M.
  • Rogoff, Kenneth S.

Abstract

The historical frequency of banking crises is similar in advanced and developing countries, with quantitative parallels in both the run-ups and the aftermath. We establish these regularities using a dataset spanning from the early 1800s to the present. Banking crises weaken fiscal positions, with government revenues invariably contracting. Three years after a crisis central government debt increases by about 86%. The fiscal burden of banking crisis extends beyond the cost of the bailouts. We find that systemic banking crises are typically preceded by asset price bubbles, large capital inflows and credit booms, in rich and poor countries alike.

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  • Reinhart, Carmen M. & Rogoff, Kenneth S., 2013. "Banking crises: An equal opportunity menace," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4557-4573.
    • Handle: RePEc:eee:jbfina:v:37:y:2013:i:11:p:4557-4573
    DOI: 10.1016/j.jbankfin.2013.03.005
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    More about this item

    Keywords

    Banking; Financial crises; Recessions; Real estate; Debt; Historical;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • F3 - International Economics - - International Finance
    • N0 - Economic History - - General

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