EconPapers    
Economics at your fingertips  
 

The Real Effect of Banking Crises

Giovanni Dell'ariccia, Raghuram Rajan and Enrica Detragiache ()

No 2005/063, IMF Working Papers from International Monetary Fund

Abstract: Banking crises are usually followed by a decline in credit and growth. Is this because crises tend to take place during economic downturns, or do banking sector problems have independent negative effects on the economy? To answer this question we examine industrial sectors with differing needs for financing. If banking crises have an exogenous detrimental effect on real activity, then sectors more dependent on external finance should perform relatively worse during banking crises. The evidence in this paper supports this view. Additional support comes from the fact that sectors that predominantly have small firms, and thus are typically bank-dependent, also perform relatively worse during banking crises. The differential effects across sectors are stronger in developing countries, in countries with less access to foreign finance, and where banking crises have been more severe.

Keywords: WP; bank distress; lending channel; growth differential; interaction term; crisis inception (search for similar items in EconPapers)
Pages: 34
Date: 2005-03-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=18104 (application/pdf)

Related works:
Journal Article: The real effect of banking crises (2008) Downloads
Working Paper: The Real Effect of Banking Crises (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2005/063

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().

 
Page updated 2025-03-19
Handle: RePEc:imf:imfwpa:2005/063