Banking crises and exchange rate regimes: is there a link?

Domaç, Ilker; Pería, María Soledad Martínez

doi:10.1016/s0022-1996(02)00081-8

Cited by 108 publications

(76 citation statements)

References 23 publications

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“…A number of studies have documented the higher propensity of banking (Domaç and Peria;Ghosh et al, 2003;Rogoff et al, 2004;Angkinand and Willett, 2011) and currency ( Bubula and Ötker-Robe, 2003;Ghosh et al, 2003;Rogoff et al, 2004) crises in countries with less flexible exchange rate regimes. Our own empirics (Table 3, col.…”

Section: Banking and Currency Crisesmentioning

confidence: 99%

Exchange Rate Management and Crisis Susceptibility: A Reassessment

Ghosh¹,

Ostry²,

Qureshi³

2015

IMF Econ Rev

116

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This paper revisits the bipolar prescription for exchange rate regime choice and asks two questions: are the poles of hard pegs and pure floats still safer than the middle? And where to draw the line between safe floats and risky intermediate regimes? Our findings, based on a sample of 50 EMEs over 1980-2011, show that macroeconomic and financial vulnerabilities are significantly greater under less flexible intermediate regimes-including hard pegs-as compared to floats. While not especially susceptible to banking or currency crises, hard pegs are significantly more prone to growth collapses, suggesting that the security of the hard end of the prescription is largely illusory. Intermediate regimes as a class are the most susceptible to crises, but "managed floats"-a subclass within such regimes-behave much more like pure floats, with significantly lower risks and fewer crises. "Managed floating," however, is a nebulous concept; a characterization of more crisis prone regimes suggests no simple dividing line between safe floats and risky intermediate regimes. JEL Classification Numbers: F31, F33

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Section: Banking and Currency Crisesmentioning

confidence: 99%

Exchange Rate Management and Crisis Susceptibility: A Reassessment

Ghosh¹,

Ostry²,

Qureshi³

2015

IMF Econ Rev

116

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“…The addition of these last three years is crucial as they incorporate the Global Financial Crisis of 2008. Table A2 in 1998,2002) and Domac and Peria (2003). It seems that the incorporation of the Global Financial Crisis, which a¤ected almost exclusively developed nations, tends to shift the predictive power from the growth rate to the level of private credit.…”

Section: Determinants Of …Nancial Crisesmentioning

confidence: 99%

“…3 2 For recent evidence, with an emphasis on the 2008 global …nancial crisis, see Schularick and Taylor (2012) and Jorda et al (2011). For earlier evidence, with an emphasis on crises in developing countries, see Kaminsky and Reinhart (1999), Demirgüç-Kunt andDetragiache (1998, 2002) and Domac and Peria (2003). 3 The main exception to this is student loans, which are used to accumulate human Equally important, household and …rm credit may have di¤erent e¤ects on the occurrence of crises.…”

Section: Introductionmentioning

confidence: 99%

Credit expansion and the economy

Angeles

2015

Applied Economics Letters

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Credit expansion has been associated with faster economic growth and with a higher occurrence of …nancial crises, a pair of results which seem to contradict each other. This paper advances an explanation for these results by separating credit to the private sector into credit to …rms and credit to households. The empirical analysis shows that credit to …rms is responsible for the positive growth e¤ect, while the higher occurrence of crises is mainly due to credit to households. The events of the last decade, where fast credit expansion led to crises and very little growth, can be understood as a shift in the composition of credit towards its household component.JEL classi…cation: E44, G21.

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“…The resulting expansion of credit value has emerged a strong correlation between declining assets. Domaç and Peria (2000) explored the links between exchange rate regimes and financial stability and used logit analysis to calculate the probability of a banking crisis. They stated that a decrease in trade volume can negatively affect the borrowers' debt repayment and it would increase the probability of banking crisis.…”

Section: Literature Reviewmentioning

confidence: 99%

Non-performing Loans in Turkish Banking Sector and Balance Sheets Effects

Erdoğdu¹

2015

JMAA

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In the 21st century, while the scope of banking activities has been expanding every day, collecting deposits and providing credit remain as their main and most important functions. They transfer the collected funds thanks to the market confidence they create back to the market in terms of the credits they give. For the organizations operating in the banking sector, crediting is the highest revenue earning source. However, uncollected loans may disrupt the activities of banks and may reduce their effectiveness. Therefore, the control of bank credits has a particular importance in the bank balance sheets. In this study, the relationship between bank balance sheets and non-performing loans (NPL) will be analyzed using Granger causality test and vector autoregressive (VAR) method. This study aims to discuss the impact of NPL on balance sheets and contribute to making correct credit decisions. It also intends to assist to reduce the NPL ratios of banks and minimize the level of negativity in their financial statements.

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Banking crises and exchange rate regimes: is there a link?

Cited by 108 publications

References 23 publications

Exchange Rate Management and Crisis Susceptibility: A Reassessment

Exchange Rate Management and Crisis Susceptibility: A Reassessment

Credit expansion and the economy

Non-performing Loans in Turkish Banking Sector and Balance Sheets Effects

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