The Consequences of Banking Crises for Public Debt

Davide Furceri and Aleksandra Zdzienicka ()

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Abstract: The aim of this paper is to assess the consequences of banking crises for public debt. Using an unbalanced panel of 154 countries from 1980 to 2006, the paper shows that banking crises are associated with a significant and long- lasting increase in government debt. The effect is a function of the severity of the crisis. In particular, we find that for severe crises, comparable to the most recent one in terms of output losses, banking crises are followed by a medium-term increase of about 37 percentage points in the government gross debt-to-GDP ratio. We also find that the debt ratio increased more in countries with a worse initial fiscal position (in terms of the gross debt-to-GDP ratio) and with a higher share of foreign debt.

Keywords: Output Growth; Financial Crisis; CEECs (search for similar items in EconPapers)
Date: 2010
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00497925v1
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Citations: View citations in EconPapers (14)

Published in 2010

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Related works:
Journal Article: The Consequences of Banking Crises for Public Debt (2012)
Working Paper: The Consequences of Banking Crises on Public Debt (2010)
Working Paper: The Consequences of Banking Crises on Public Debt (2010)
Working Paper: The Consequences of Banking Crises for Public Debt (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00497925

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