Anatomy of banking crises in developing and emerging market countries
This paper uses a Binary Classification Tree (BCT) model to analyze banking crises in 50 emerging market and developing countries during 1990-2005. The BCT model identifies three conditions (and the specific threshold of the key indictors) at which the vulnerability to banking crisis increases--(i) very high inflation, (ii) highly dollarized bank deposits combined with nominal depreciation or low bank liquidity, and (iii) low bank profitability--which highlight that foreign currency risk, poor financial soundness, and macroeconomic instability are important drivers of banking crises. The results also emphasize the importance of conditional thresholds in triggering crises, in that banking crises are underlined by a combination of vulnerabilities--or a sequence of (non-linear) conditions--rather than the deterioration of a unique factor.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eduardo Levy-Yeyati, 2004.
"FINANCIAL DOLLARIZATION: Evaluating the consequences,"
Econometric Society 2004 Latin American Meetings
184, Econometric Society.
- Eduardo Levy Yeyati, 2006. "Financial dollarization: evaluating the consequences," Economic Policy, CEPR;CES;MSH, vol. 21(45), pages 61-118, 01.
- Eduardo Levy Yeyati, 2005. "Financial Dollarisation: Evaluating The Consequences," Business School Working Papers findollarisation, Universidad Torcuato Di Tella.
- P. Honohan, 2000.
"Banking System Failures in Developing and Transition Countries: Diagnosis and Prediction,"
Banca Monte dei Paschi di Siena SpA, vol. 29(1), pages 83-109, 02.
- Patrick Honohan, 1997. "Banking system failures in developing and transition countries: Diagnosis and predictions," BIS Working Papers 39, Bank for International Settlements.
- John H. Boyd & Bruce A. Champ, 2003. "Inflation and financial market performance: what have we learned in the last ten years," Working Paper 0317, Federal Reserve Bank of Cleveland.
- Reinhart, Carmen & Kaminsky, Graciela, 2000.
"Las crisis gemelas: las causas de los problemas bancarios y de balanza de pagos
[The twin crises: Te causes of banking and balance of payments problems]," MPRA Paper 13842, University Library of Munich, Germany.
- Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
- Reinhart, Carmen & Kaminsky, Graciela, 1999. "The twin crises: The causes of banking and balance of payments problems," MPRA Paper 14081, University Library of Munich, Germany.
- Graciela L. Kaminsky & Carmen M. Reinhart, 1996. "The twin crises: the causes of banking and balance-of-payments problems," International Finance Discussion Papers 544, Board of Governors of the Federal Reserve System (U.S.).
- Bongini, Paola & Claessens, Stijn & Ferri, Giovanni, 2000.
"The political economy of distress in East Asian financial institutions,"
Policy Research Working Paper Series
2265, The World Bank.
- Paola Bongini & Stijn Claessens & Giovanni Ferri, 2001. "The Political Economy of Distress in East Asian Financial Institutions," Journal of Financial Services Research, Springer;Western Finance Association, vol. 19(1), pages 5-25, February.
- Axel Schimmelpfennig & Nouriel Roubini & Paolo Manasse, 2003. "Predicting Sovereign Debt Crises," IMF Working Papers 03/221, International Monetary Fund.
- Graciela Laura Kaminsky, 1999.
"Currency and Banking Crises; The Early Warnings of Distress,"
IMF Working Papers
99/178, International Monetary Fund.
- Graciela L. Kaminsky, 1998. "Currency and banking crises: the early warnings of distress," International Finance Discussion Papers 629, Board of Governors of the Federal Reserve System (U.S.).
- Swart R. Ghosh & Atish R. Ghosh, 2002.
"Structural Vulnerabilities and Currency Crises,"
IMF Working Papers
02/9, International Monetary Fund.
- Gianni De Nicolo & Patrick Honohan & Alain Ize, 2003.
"Dollarization of the Banking System; Good or Bad?,"
IMF Working Papers
03/146, International Monetary Fund.
- De Nicolo, Gianni & Honohan, Patrick & Ize, Alain, 2003. "Dollarization of the banking system : good or bad?," Policy Research Working Paper Series 3116, The World Bank.
- Barry Eichengreen and Carlos Arteta., 2000.
"Banking Crises in Emerging Markets: Presumptions and Evidence,"
Center for International and Development Economics Research (CIDER) Working Papers
C00-115, University of California at Berkeley.
- Eichengreen, Barry & Arteta, Carlos, 2000. "Banking Crises in Emerging Markets: Presumptions and Evidence," Center for International and Development Economics Research, Working Paper Series qt3pk9t1h2, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
- Barry Eichengreen & Carlos Arteta, 2001. "Banking Crises in Emerging Markets: Presumptions and Evidence," Macroeconomics 0012012, EconWPA.
- repec:idb:wpaper:318 is not listed on IDEAS
- Asli DemirgÃ¼Ã§-Kunt & Enrica Detragiache, 2005.
"Cross-Country Empirical Studies of Systemic Bank Distress: A Survey,"
National Institute Economic Review,
National Institute of Economic and Social Research, vol. 192(1), pages 68-83, April.
- Demirguc-Kunt, Asli & Detragiache, Enrica, 2005. "Cross-country empirical studies of systemic bank distress : a survey," Policy Research Working Paper Series 3719, The World Bank.
- Asli DemirgÃ¼Ã§-Kunt & Enrica Detragiache, 2005. "Cross-Country Empirical Studies of Systemic Bank Distress; A Survey," IMF Working Papers 05/96, International Monetary Fund.
- Caprio, Gerard Jr. & Klingebiel, Daniela, 1996. "Bank insolvencies : cross-country experience," Policy Research Working Paper Series 1620, The World Bank.
- Paolo Manasse & Nouriel Roubini, 2005.
"'Rules of Thumb' for Sovereign Debt Crises,"
- Eichengreen, Barry & Rose, Andrew K, 1998.
"Staying Afloat When the Wind Shifts: External Factors and Emerging-Market Banking Crises,"
CEPR Discussion Papers
1828, C.E.P.R. Discussion Papers.
- Barry Eichengreen & Andrew K. Rose, 1998. "Staying Afloat When the Wind Shifts: External Factors and Emerging-Market Banking Crises," NBER Working Papers 6370, National Bureau of Economic Research, Inc.
- Marcos Chamon & Paolo Manasse & Alessandro Prati, 2007. "Can We Predict the Next Capital Account Crisis?," IMF Staff Papers, Palgrave Macmillan, vol. 54(2), pages 270-305, June.
- Alejandro Gaytán & Christian A. Johnson, 2002. "A Review of the Literature on Early Warning Systems for Banking Crises," Working Papers Central Bank of Chile 183, Central Bank of Chile.
- Carlos O. Arteta, 2003. "Are financially dollarized countries more prone to costly crises?," International Finance Discussion Papers 763, Board of Governors of the Federal Reserve System (U.S.).
- Honohan, Patrick & Klingebiel, Daniela, 2000. "Controlling the fiscal costs of banking crises," Policy Research Working Paper Series 2441, The World Bank.
- Jeffrey A. Frankel & Shang-Jin Wei, 2004. "Managing Macroeconomic Crises," NBER Working Papers 10907, National Bureau of Economic Research, Inc.
- Asli DemirgÃ¼Ã§-Kunt & Enrica Detragiache, 1998. "The Determinants of Banking Crises in Developing and Developed Countries," IMF Staff Papers, Palgrave Macmillan, vol. 45(1), pages 81-109, March.
- Nouriel Roubini & Paolo Manasse, 2005. "â€œRules of Thumbâ€ for Sovereign Debt Crises," IMF Working Papers 05/42, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:eee:jimfin:v:30:y:2011:i:2:p:354-376. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.