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The Roots of Banking Crises: The Macroeconomic Context

  • Michael Gavin
  • Ricardo Hausmann

This paper discusses the ways in which macroeconomic developments can put stress on banks, and in extreme cases lead to banking crises. These macroeconomic causes of bank vulnerability and crisis have important implications for regulatory regimes, and for macroeconomic policy itself. Much of the discussion emphasizes the need for monetary policy to be set with an eye on the state of the domestic banking system as an occasionally important consideration. One purpose of this paper is to promote a discussion of how to do a better job of incorporating weak banking systems into macroeconomic policy management.

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Paper provided by Inter-American Development Bank in its series IDB Publications (Working Papers) with number 5819.

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Date of creation: Jan 1996
Date of revision:
Handle: RePEc:idb:brikps:5819
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  1. Armando Montenegro, 1983. "La crisis del sector financiero colombiano," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 2(4), pages 51-89, December.
  2. Armando Montenegro, 1983. "La crisis del sector financiero colombiano," Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 2(4), pages 51-89, Diciembre.
  3. Edward J. Kane, 1989. "How Incentive-Incompatible Deposit-Insurance Funds Fail," NBER Working Papers 2836, National Bureau of Economic Research, Inc.
  4. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 14-23.
  5. Guillermo A. Calvo & Enrique G. Mendoza, 1996. "Mexico's balance-of-payments crisis: a chronicle of death foretold," International Finance Discussion Papers 545, Board of Governors of the Federal Reserve System (U.S.).
  6. Mathias Dewatripont & Jean Tirole, 1994. "The prudential regulation of banks," ULB Institutional Repository 2013/9539, ULB -- Universite Libre de Bruxelles.
  7. repec:oup:restud:v:51:y:1984:i:3:p:393-414 is not listed on IDEAS
  8. Steven Riess Weisbrod & Liliana Rojas-Suárez, 1994. "Financial Market Fragilities in Latin America: From Banking Crisis Resolution to Current Policy Challenges," IMF Working Papers 94/117, International Monetary Fund.
  9. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
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