The Real Effect of Banking Crises
Posted: 6 May 2005
There are 2 versions of this paper
The Real Effect of Banking Crises
Date Written: March 1, 2005
Abstract
Banking crises are usually followed by a decline in credit and growth. Is this because crises tend to take place during economic downturns, or do banking sector problems have independent negative effects on the economy? To answer this question we examine industrial sectors with differing needs for financing. If banking crises have an exogenous detrimental effect on real activity, then sectors more dependent on external finance should perform relatively worse during banking crises. The evidence in this paper supports this view. Additional support comes from the fact that sectors that predominantly have small firms, and thus are typically bank-dependent, also perform relatively worse during banking crises. The differential effects across sectors are stronger in developing countries, in countries with less access to foreign finance, and where banking crises have been more severe.
JEL Classification: E44, G21
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Is the 2007 U.S. Sub-Prime Financial Crisis so Different? an International Historical Comparison
By Carmen Reinhart and Kenneth Rogoff
-
The Aftermath of Financial Crises
By Carmen Reinhart and Kenneth Rogoff
-
The Aftermath of Financial Crises
By Carmen Reinhart and Kenneth Rogoff
-
Banking Crises: An Equal Opportunity Menace
By Carmen Reinhart and Kenneth Rogoff
-
Banking Crises: An Equal Opportunity Menace
By Carmen Reinhart and Kenneth Rogoff
-
Government Debt in Emerging Market Countries: A New Data Set
By Olivier Jeanne and Anastasia Guscina
-
By Carmen Reinhart and Kenneth Rogoff
-
By Carmen Reinhart and Kenneth Rogoff
-
Relative Price Volatility Under Sudden Stops: The Relevance of Balance Sheet Effects
By Guillermo A. Calvo, Alejandro Izquierdo, ...