Banking Crises and Exchange Rate Regimes : Is There a Link?
The authors investigate the links between banking crises, and exchange rate regimes, using a comprehensive data set that includes developed, and developing countries over the last two decades. In particular, they examine whether the choice of excha...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2000/11/748726/banking-crises-exchange-rate-regimes-link http://hdl.handle.net/10986/19778 |
| Summary: | The authors investigate the links
between banking crises, and exchange rate regimes, using a
comprehensive data set that includes developed, and
developing countries over the last two decades. In
particular, they examine whether the choice of exchange rate
regime affects the likelihood, cost, and duration of banking
crises. Empirical results indicate that adopting a fixed
exchange rate, diminishes the likelihood of a banking crisis
in developing countries. But once a banking crisis occurs,
its real costs - in terms of forgone output growth - are
higher for countries with more stringent exchange rate
requirements. The duration of crises seems not to be
affected by exchange rate policy. Instead, it is influenced
mainly by the size of the credit boom before the crisis. |
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