On Zombie Banks and Recessions after Systemic Banking Crises

Sweder van Wijnbergen
Authors registered in the RePEc Author Service: Timotej Homar ()

No 10963, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: What costs do zombie banks impose on society? We analyze the effects of government and central bank interventions in 68 systemic banking crises since 1980, of which 28 are part of the recent global financial crisis. Our estimation approach controls for the correlation between intervention measures and the time-invariant component of unobservable crisis severity. We find that timely bank recapitalizations substantially reduce the duration of recessions, underscoring the distortions caused by zombie banks and the costs of regulatory forbearance.

Keywords: Bank recapitalization; Economic recovery; Financial crises; Intervention; Regulatory forbearance; Zombie banks (search for similar items in EconPapers)
JEL-codes: E44 E58 G21 G28 (search for similar items in EconPapers)
Date: 2015-11
New Economics Papers: this item is included in nep-ban and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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