Factors correlating with long-lasting banking crises: a special focus on crisis resolution policy measures

Anichul Hoque Khan and Hasnat Dewan

Applied Economics Letters, 2013, vol. 20, issue 3, 227-232

Abstract: The costs of a long-lasting banking crisis are high because both the depositors and the investors lose confidence in the banking system. For a rapid recovery from such a crisis, the government often undertakes Crisis Resolution Policy (CRP) measure(s). Existing studies have paid little attention to these CRP measures and their correlations with long-lasting banking crises. This study fills that literature void. The major finding is that the CRP measure that allows the regulation forbearance to keep the insolvent banks operative is strongly significant in increasing the duration of a banking crisis. Another CRP measure, which relieves bank borrowers from paying debt, is also significant but weakly significant in increasing the duration of a crisis.

Date: 2013
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DOI: 10.1080/13504851.2012.688936

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