The Determinants of Banking Crises: Evidence From Developing and Developed Countries

Asli Demirguc-Kunt and Enrica Detragiache ()

No 1997/106, IMF Working Papers from International Monetary Fund

Abstract: The paper studies the factors associated with the emergence of systemic banking crises in a large sample of developed and developing countries in 1980–94, using a multivariate logit econometric model. The results suggest that crises tend to erupt when the macroeconomic environment is weak, particularly when growth is low and inflation is high. Also, high real interest rates are clearly associated with systemic banking sector problems, and there is some evidence that vulnerability to balance of payments crises has played a role. Countries with an explicit deposit insurance scheme were particularly at risk, as were countries with weak law enforcement.

Keywords: WP; banking crisis; bank; banking sector; interest rate; Banking Crises; Financial Fragility; Deposit Insurance; banking sector problem; banking sector fragility; rate of return; bank balance; asset portfolio; banking crisis variable; deposit insurance dummy; banking crisis dummy variable; bank supervisor; deposit insurance dummy variable; banking sector rescue operations; Commercial banks; Real interest rates; Africa; Middle East; Eastern Europe; Asia and Pacific (search for similar items in EconPapers)
Pages: 31
Date: 1997-09-01
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Citations: View citations in EconPapers (205)

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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1997/106

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