Financial measures and banking crisis: New evidence

Martin M. Bojaj and David Y. Aharon

Finance Research Letters, 2024, vol. 70, issue C

Abstract: This paper assesses the power of measures related to the financial cycle to predict the probability of a banking crisis. Data are at a yearly frequency, span the period 1980–2020, and cover 196 countries. The standardized cumulative credit-to-GDP ratio is important for advanced economies and to a lesser extent for low-income developing countries, but it is not for emerging economies. IMF and World Bank policymakers and analysts need to take a more comprehensive approach to evaluating financial stability and systemic vulnerabilities in emerging economies and low-income developing countries because of their financial institutions’ deep informal banking sector.

Keywords: Banking crisis; Financial measures; Logit; Forecasting (search for similar items in EconPapers)
JEL-codes: C58 E50 G17 G32 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:70:y:2024:i:c:s1544612324013552

DOI: 10.1016/j.frl.2024.106326

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