How do financial crises affect commercial bank liquidity? Evidence from Latin America and the Caribbean

Winston Moore

MPRA Paper from University Library of Munich, Germany

Abstract: The 1990s were a turbulent time for Latin American and Caribbean countries. During this period, the region suffered from no less than sixteen banking crises. One of the most important determinants of the severity of banking crises is commercial bank liquidity. Banking systems, which are relatively liquid, are better able to deal with the large deposit withdrawals that tend to accompany bank runs. This study provides an assessment of the main determinants of bank liquidity as well as an evaluation of the impact of banking crises on liquidity. The results show that on average, bank liquidity is about 8% less than what is consistent with economic fundamentals during financial crises.

Keywords: Liquidity; Financial Crisis; Banks (search for similar items in EconPapers)
JEL-codes: E44 G21 (search for similar items in EconPapers)
Date: 2009-03-27
New Economics Papers: this item is included in nep-ban, nep-his, nep-ifn and nep-mac
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:21473

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