Currency and Banking Crises: The Early Warnings of Distress

Graciela Kaminsky

No 1999/178, IMF Working Papers from International Monetary Fund

Abstract: The abruptness and virulence of the 1997 Asian crises have led many to claim that these crises are of a new breed and were thus unforecastable. This paper examines 102 financial crises in 20 countries and concludes that the Asian crises are not of a new variety. Overall, the 1997 Asian crises, as well as previous crises elsewhere, occur when economies are in distress, making the degree of fragility of the economy a useful indicator of future crises. Based on this idea, the paper proposes different composite leading indicators of crises, evaluated in terms of accuracy both in-sample and out-of-sample.

Keywords: WP; banking crisis; currency crisis; foreign exchange; Early Warnings; Currency Crises; Banking Crises; forecasting currency; crisis time; banking fragility; currency-crisis months; currency crash; Real exchange rates; Cyclical indicators; Asia and Pacific; Global (search for similar items in EconPapers)
Pages: 38
Date: 1999-12-01
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Citations: View citations in EconPapers (177)

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