The risk of financial crises: Is it in real or financial factors?

Karolin Kirschenmann, Tuomas Malinen and Henri Nyberg

No 336, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: Are macroeconomic factors such as income inequality the real root causes of financial crises? We explore a variety of financial and macroeconomic variables to find the most reliable predictors for financial crises in 14 developed countries over a period of more than 100 years. Our results, based on a general-to-specific model selection process, indicate that the power to predict financial crises is distributed among several predictors, including income inequality and growth of bank credit. This is in line with the argument that the best predictive factors tend to vary in time.

Keywords: bank loans; income inequality; fixed effects logit. (search for similar items in EconPapers)
JEL-codes: C33 C53 E44 G01 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2014-06
New Economics Papers: this item is included in nep-cba, nep-mac and nep-rmg
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2014-336

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