Responding to Banking Crises : Lessons From Cross-Country Evidence / Enrica Detragiache, Giang Ho.

Format:

Book

Government document

Author/Creator:

Detragiache, Enrica.

Contributor:

Ho, Giang.

International Monetary Fund.

Series:

IMF Working Papers; Working Paper ; No. 2010/018

IMF Working Papers

Language:

English

Subjects (All):

Financial crises.

Banks and banking.

Physical Description:

31 p.

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2010.

Language Note:

English

Summary:

A common legacy of banking crises is a large increase in government debt, as fiscal resources are used to shore up the banking system. Do crisis response strategies that commit more fiscal resources lower the economic costs of crises? Based on evidence from a sample of 40 banking crises we find that the answer is negative. In fact, policies that are riskier for the government budget are associated with worse, not better, post-crisis performance. We also show that parliamentary political systems are more prone to adopt bank rescue measures that are costly for the government budget. We take advantage of this relationship to instrument the policy response, thereby addressing concerns of joint endogeneity. We find no evidence that endogeneity is a source of bias.

Contents:

Intro

Contents

I. Introduction

II. Methodology and Data

A. Empirical Model

B. Policy Response Index

C. Control Variables

D. The Instrument

III. The Results

A. Results from Baseline Specification

B. Comparison with Other Results in the Literature

C. Sensitivity Analysis: Additional Controls

D. Sensitivity Analysis: Alternative Measures of Crisis Performance

E. Sensitivity Analysis: Alternative Policy Response Indexes

F. Fiscal Policy during the Crisis.

IV. Conclusions

References

Text Tables

1. Correlation among Crisis Performance Measures

2. Construction of the Policy Index

3. Crisis Episodes, Policy Response, and Political System

4. Cross-Correlations between Political System and Crisis Policies

5. Baseline Results

6. Additional Control Variables

7. Alternative Measures of Crisis Performance

8. Alternative Policy Indexes

9. Fiscal Policy Response and Political System

Figure 1. Distribution of Policy Index

Appendix Tables

A1. Variable Definitions and Data Sources

A2. Summary Statistics

A3. Cross Correlations among Variables.

Notes:

Bibliographic Level Mode of Issuance: Monograph

Includes bibliographical references.

Description based on print version record.

ISBN:

9786612845277

9781462300259

1462300251

9781451962239

1451962231

9781282845275

1282845276

9781452708683

1452708681

OCLC:

502478206