Money market pressure and the determinants of banking crises
Journal
Journal of Money, Credit and Banking
Journal Volume
39
Journal Issue
5
Pages
1037-1066
Date Issued
2007
Author(s)
Von Hagen J.
Abstract
This article develops an index of money market pressure to identify banking crises. We define banking crises as periods in which there is excessive demand for liquidity in the money market. We begin with the theoretical foundation of this new method. With the newly defined crisis episodes, we examine the determinants of banking crises using data complied from 47 countries. We find that slowdown of real GDP, lower real interest rates, extremely high inflation, large fiscal deficits, and over-valued exchange rates tend to precede banking crises. The effects of monetary base growth on the probability of banking crises are negligible. ? 2007 The Ohio State University.
Subjects
Conditional logit model; Events method; Identification of banking crises; Index of money market pressure
SDGs
Type
journal article