Larger crises cost more: Impact of banking sector instability on output growth

Dobromił Serwa ()

Journal of International Money and Finance, 2010, vol. 29, issue 8, 1463-1481

Abstract: We propose a method for calculating the macroeconomic costs of banking crises that controls for the downward impact of recessions on banking activity. This method uses an event-study approach and a multiple-equation identification and estimation technique. In contrast to earlier research, we estimate the cost of crises based on the size of banking crises. The extent of a crisis is measured using banking sector aggregates. The results, based on our method and data from over 100 banking crises, suggest that it is the size of the crisis that matters for economic growth. Lower credit and money growth during crises cause GDP growth to decline.

Keywords: Banking; crises; Costs; Output; growth; Event-study (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0261-5606(10)00074-4
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Larger crises cost more: impact of banking sector instability on output growth (2008)
Working Paper: Larger crises cost more: impact of banking sector instability on output growth (2007)
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:eee:jimfin:v:29:y:2010:i:8:p:1463-1481

Access Statistics for this article

Journal of International Money and Finance is currently edited by J. R. Lothian

More articles in Journal of International Money and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().