Bad banks choking good banks: simulating balance sheet contagion

Saed Khalil
Additional contact information
Saed Khalil: Palestine Monetary Authority, Palestine

European Journal of Economics and Economic Policies: Intervention, 2015, vol. 12, issue 1, 51-72

Abstract: We investigate the propagation of contagion through banks’ balance sheets in a two-country model. We simulate an increase in non-performing loans in one bank, and study the effects on other banks and the macro-economy of each country. We show that credit crunches destabilize each economy in the short run and in the long run reduce potential output. We quantify this loss.

Keywords: credit crunch; contagion; stock-flow consistent models (search for similar items in EconPapers)
JEL-codes: E32 E37 E51 G33 (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.elgaronline.com/abstract/journals/ejeep/12-1/ejeep.2015.01.06.xml (application/pdf)
Restricted access

Related works:
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:elg:ejeepi:v:12:y:2015:i:1:p51-72

Access Statistics for this article

European Journal of Economics and Economic Policies: Intervention is currently edited by Torsten Niechoj

More articles in European Journal of Economics and Economic Policies: Intervention from Edward Elgar Publishing
Bibliographic data for series maintained by Phillip Thompson ().