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The Determinants of Banking Crises in Developing and Developed Countries By Asli Demirguc-Kunt and Enrica Detragiache Full Text of This Article (PDF 1,892 K)
Abstract: This paper studies the factors associated with the emergence of systemic banking crises in a
large sample of developed and developing countries in 1980-94 using a multivariate logit
econometric model. The results suggest that crises tend to erupt when the macroeconomic
environment is weak, particularly when growth is low and inflation is high. Also, high real
interest rates are clearly associated with systemic banking sector problems, and there is some evidence
that vulnerability to balance of payments crises has played a role. Countries with an explicit
deposit insurance scheme were particularly at risk, as were countries with weak law
enforcement. [JEL E44,G21] © 1998 International Monetary Fund |
