How to Foresee Banking Crises? A Survey of the Empirical Literature
Posted: 29 Oct 2015
A survey of the empirical literature on early warning indicators of banking crises is presented. Descriptive analyses have been published for decades, but cross-national panel data analyses have only been performed since the late 1990s. More recently, the severity of the subprime-Lehman crisis has been compared across countries. Most findings corroborate the view that during a typical build-up phase, banks borrow internationally to finance domestic lending, boosting the current account deficit and causing a real estate bubble. Increasing debt and imbalances lead to a crisis. Both developing and developed countries have experienced these kinds of boom-bust cycles.
Keywords: Banking crisis, Financial crisis, Early warning, Financial instability
JEL Classification: E44, G01, G17, N10
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