Booms and banking crises
Frédéric Boissay,
Fabrice Collard and
Frank Smets
No 545, BIS Working Papers from Bank for International Settlements
Abstract:
Banking crises are rare events that break out in the midst of credit intensive booms and bring about particularly deep and long-lasting recessions. This paper attempts to explain these phenomena within a textbook DSGE model that features a non-trivial banking sector. In the model, banks are heterogeneous with respect to their intermediation skills, which gives rise to an interbank market. Moral hazard and asymmetric information in this market may lead to sudden interbank market freezes, banking crises, credit crunches and severe recessions. Those "financial" recessions follow credit booms and are not triggered by large exogenous adverse shocks.
Keywords: moral hazard; asymmetric information; saving glut; lending boom; credit crunch; banking crisis (search for similar items in EconPapers)
Pages: 65 pages
Date: 2016-02
New Economics Papers: this item is included in nep-ban and nep-dge
References: Add references at CitEc
Citations: View citations in EconPapers (177)
Downloads: (external link)
http://www.bis.org/publ/work545.pdf Full PDF document (application/pdf)
http://www.bis.org/publ/work545.htm (text/html)
Related works:
Journal Article: Booms and Banking Crises (2016) ![Downloads](/downloads_econpapers.gif)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:545
Access Statistics for this paper
More papers in BIS Working Papers from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler (webmaster@bis.org).