EconPapers    
Economics at your fingertips  
 

Achieving a balance between the avoidance of banking problems and their resolution—can financial cycle dynamics predict bank distress?

Giannoula Karamichailidou, David G. Mayes () and Hanno Stremmel
Additional contact information
Giannoula Karamichailidou: University of Auckland
David G. Mayes: University of Auckland
Hanno Stremmel: WHC – Otto Beisheim School of Management

Journal of Banking Regulation, 2018, vol. 19, issue 1, 18-32

Abstract: Abstract The global financial crisis has emphasised the importance of the financial cycle in contributing to bank failures. In this paper, we consider how far it is possible to anticipate problems in banks by using early warning indicators available from published information on the financial cycle in the economy. We use a traditional z-score model that incorporates bank-specific, banking structure and macroeconomic variables to which we add financial cycle indicators. We test these models on an unbalanced panel of 2239 European banks over the period 1999–2014. We find that the financial cycle adds noticeably to the ability to predict bank distress up to 2 years into the future.

Keywords: Early warning systems; Bank failures; Financial crises (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1057/s41261-017-0054-z Abstract (text/html)
Access to full text is restricted to subscribers.

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:pal:jbkreg:v:19:y:2018:i:1:d:10.1057_s41261-017-0054-z

Ordering information: This journal article can be ordered from
http://www.springer.com/finance/journal/41261/PS2

Access Statistics for this article

Journal of Banking Regulation is currently edited by Dalvinder Singh

More articles in Journal of Banking Regulation from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2018-04-21
Handle: RePEc:pal:jbkreg:v:19:y:2018:i:1:d:10.1057_s41261-017-0054-z