The Impact of Banking Crises on Money Demand and Price Stability

Maria Martinez Peria

IMF Staff Papers, 2002, vol. 49, issue 3, 1

Abstract: This paper empirically investigates the monetary impact of banking crises in Chile, Colombia, Denmark, Japan, Kenya, Malaysia, and Uruguay during 1975-98. Cointegration analysis and error correction modeling are used to research two issues: (i) whether money demand stability is threatened by banking crises; and (ii) whether crises lead to structural breaks in the relation between monetary indicators and prices. Overall, no systematic evidence that banking crises cause money demand instability is found. However, the results on price stability are mixed; for three out of the seven countries, there appears to be evidence of instability. . Copyright 2002, International Monetary Fund

JEL-codes: C22 E31 E41 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (5)

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