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Taming financial development to reduce crises

Sami Ben Naceur, Bertrand Candelon and Quentin Lajaunie ()

Emerging Markets Review, 2019, vol. 40, issue C, -

Abstract: This paper assesses whether and how financial development triggers the occurrence of banking crises. It builds on a database that includes financial development as well as financial access, depth and efficiency for almost 100 countries. Through estimation of a dynamic logit panel model, it appears that financial development, from an institutional dimension and to a lesser extent from a market dimension, triggers financial stability within a 1- to 2-year horizon. Additionally, whereas financial access is destabilizing for advanced countries, it is stabilizing for emerging and low incomes ones. Both results have important implications for macroprudential policies and financial regulations.

Keywords: Financial development; Banking crises; Regulation (search for similar items in EconPapers)
JEL-codes: C33 G01 G18 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.ememar.2019.05.003

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