The Twin Crises: The Causes of Banking and Balance-of-Payments Problems

Carmen Reinhart and Graciela Kaminsky ()

American Economic Review, 1999, vol. 89, issue 3, 473-500

Abstract: In the wake of the Mexican and Asian currency turmoil, the subject of financial crises have come to the forefront of academic and policy discussions. This paper analyzes the links between banking and currency crises. The authors find that problems in the banking sector typically precede a currency crisis--the currency crisis deepens the banking crisis, activating a vicious spiral; financial liberalization often precedes banking crises. The anatomy of these episodes suggests that crises occur as the economy enters a recession, following a prolonged boom in economic activity that was fueled by credit, capital inflows, and accompanied by an overvalued currency.

JEL-codes: F32 F34 G21 O16 O19 (search for similar items in EconPapers)
Date: 1999
Note: DOI: 10.1257/aer.89.3.473
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3039)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/aer.89.3.473 (application/pdf)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Las crisis gemelas: las causas de los problemas bancarios y de balanza de pagos (2000)
Working Paper: The twin crises: The causes of banking and balance of payments problems (1999)
Working Paper: The twin crises: the causes of banking and balance-of-payments problems (1996)
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:aea:aecrev:v:89:y:1999:i:3:p:473-500

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().