Inside the Crisis : An Empirical Analysis of Banking Systems in Distress
Much of the substantial literature on banking crises, focuses on early warning indicators. The authors look at what happens to the economy, and the banking sector after a banking crisis breaks out. Much of the theory of banking crises assigns a cen...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2000/08/693219/inside-crisis-empirical-analysis-banking-systems-distress http://hdl.handle.net/10986/19812 |
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okr-10986-198122021-04-23T14:03:46Z Inside the Crisis : An Empirical Analysis of Banking Systems in Distress Demirguc-Kunt, Asli Detragiache, Enrica Gupta, Poonam ASSET MANAGEMENT ASSET PRICES BAILOUT COSTS BANK ASSETS BANK CAPITAL BANK CREDIT BANK DEPOSITS BANK FAILURES BANK LENDING BANK LIQUIDITY BANK LOANS BANK RECAPITALIZATION BANK RUNS BANK SAFETY BANKING CRISES BANKING CRISIS BANKING DEPOSITS BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKS BONDS CAPITALIZATION CENTRAL BANK CENTRAL BANK LENDING CENTRAL BANKS CONTINGENT LIABILITIES COVERAGE CURRENCY CRISES CURRENCY DEPRECIATION DEBT DEFAULT RISK DEFICITS DEMAND DEPOSITS DEPOSIT GUARANTEES DEPOSIT INSURANCE DEPOSITORS DEPOSITS DISTRESSED BANKS EARNING ASSETS EMERGING MARKETS EMPIRICAL ANALYSIS FEDERAL RESERVE BANK OF ATLANTA FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FOREIGN BANKS FOREIGN CURRENCY DEPOSITS FOREIGN EXCHANGE GDP GDP PER CAPITA GROWTH RATE INFLATION INSOLVENCY INTEREST MARGIN INTEREST RATE INTEREST RATES LENDER OF LAST RESORT LOAN LOSS PROVISIONS MACROECONOMIC POLICIES MACROECONOMIC SHOCKS MARKET DISCIPLINE MERGERS MONETARY AUTHORITIES MONETARY POLICIES OPERATING COSTS OVERHEAD COSTS POLITICAL ECONOMY PROFITABILITY RATE OF EXCHANGE REAL INTEREST RATE REAL SECTOR RESERVES RETURN ON ASSETS RISK PREMIUMS SAFETY NETS SECURITIES SMALL BANKS SYSTEMIC BANKING CRISES TIME DEPOSITS TIME SERIES TRANSITION ECONOMIES VALUATION Much of the substantial literature on banking crises, focuses on early warning indicators. The authors look at what happens to the economy, and the banking sector after a banking crisis breaks out. Much of the theory of banking crises assigns a central role to depositor runs, with vulnerability to runs viewed as a basic characteristic of banks as financial intermediaries. But banking systems can be financially distressed, even when depositors do not withdraw their deposits, if other bank creditors rush for the exit, or if banks become insolvent. Are contemporary banking crises characterized by large declines in deposits? The authors find that contemporary banking crises are not accompanied by declines in aggregate bank deposits, and credit does not fall relative to output, but the growth of both deposits, and credit does slow down substantially. Output recovery begins the second year after the crisis, and is not led by a resumption of credit growth. Instead, banks (including the stronger banks) reallocate their asset portfolio away from loans. This suggests that protecting deposits during a banking crisis, may not be enough to protect bank credit, as lack of usable collateral, and poor borrower creditworthiness, discourage banks from lending. However, protecting bank credit may not be a priority right after a crisis, as the real economy can rebound without it, at least while there is substantial under-used capacity. 2014-08-28T17:13:14Z 2014-08-28T17:13:14Z 2000-08 http://documents.worldbank.org/curated/en/2000/08/693219/inside-crisis-empirical-analysis-banking-systems-distress http://hdl.handle.net/10986/19812 English en_US Policy Research Working Paper;No. 2431 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ASSET MANAGEMENT ASSET PRICES BAILOUT COSTS BANK ASSETS BANK CAPITAL BANK CREDIT BANK DEPOSITS BANK FAILURES BANK LENDING BANK LIQUIDITY BANK LOANS BANK RECAPITALIZATION BANK RUNS BANK SAFETY BANKING CRISES BANKING CRISIS BANKING DEPOSITS BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKS BONDS CAPITALIZATION CENTRAL BANK CENTRAL BANK LENDING CENTRAL BANKS CONTINGENT LIABILITIES COVERAGE CURRENCY CRISES CURRENCY DEPRECIATION DEBT DEFAULT RISK DEFICITS DEMAND DEPOSITS DEPOSIT GUARANTEES DEPOSIT INSURANCE DEPOSITORS DEPOSITS DISTRESSED BANKS EARNING ASSETS EMERGING MARKETS EMPIRICAL ANALYSIS FEDERAL RESERVE BANK OF ATLANTA FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FOREIGN BANKS FOREIGN CURRENCY DEPOSITS FOREIGN EXCHANGE GDP GDP PER CAPITA GROWTH RATE INFLATION INSOLVENCY INTEREST MARGIN INTEREST RATE INTEREST RATES LENDER OF LAST RESORT LOAN LOSS PROVISIONS MACROECONOMIC POLICIES MACROECONOMIC SHOCKS MARKET DISCIPLINE MERGERS MONETARY AUTHORITIES MONETARY POLICIES OPERATING COSTS OVERHEAD COSTS POLITICAL ECONOMY PROFITABILITY RATE OF EXCHANGE REAL INTEREST RATE REAL SECTOR RESERVES RETURN ON ASSETS RISK PREMIUMS SAFETY NETS SECURITIES SMALL BANKS SYSTEMIC BANKING CRISES TIME DEPOSITS TIME SERIES TRANSITION ECONOMIES VALUATION |
| spellingShingle |
ASSET MANAGEMENT ASSET PRICES BAILOUT COSTS BANK ASSETS BANK CAPITAL BANK CREDIT BANK DEPOSITS BANK FAILURES BANK LENDING BANK LIQUIDITY BANK LOANS BANK RECAPITALIZATION BANK RUNS BANK SAFETY BANKING CRISES BANKING CRISIS BANKING DEPOSITS BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKS BONDS CAPITALIZATION CENTRAL BANK CENTRAL BANK LENDING CENTRAL BANKS CONTINGENT LIABILITIES COVERAGE CURRENCY CRISES CURRENCY DEPRECIATION DEBT DEFAULT RISK DEFICITS DEMAND DEPOSITS DEPOSIT GUARANTEES DEPOSIT INSURANCE DEPOSITORS DEPOSITS DISTRESSED BANKS EARNING ASSETS EMERGING MARKETS EMPIRICAL ANALYSIS FEDERAL RESERVE BANK OF ATLANTA FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FOREIGN BANKS FOREIGN CURRENCY DEPOSITS FOREIGN EXCHANGE GDP GDP PER CAPITA GROWTH RATE INFLATION INSOLVENCY INTEREST MARGIN INTEREST RATE INTEREST RATES LENDER OF LAST RESORT LOAN LOSS PROVISIONS MACROECONOMIC POLICIES MACROECONOMIC SHOCKS MARKET DISCIPLINE MERGERS MONETARY AUTHORITIES MONETARY POLICIES OPERATING COSTS OVERHEAD COSTS POLITICAL ECONOMY PROFITABILITY RATE OF EXCHANGE REAL INTEREST RATE REAL SECTOR RESERVES RETURN ON ASSETS RISK PREMIUMS SAFETY NETS SECURITIES SMALL BANKS SYSTEMIC BANKING CRISES TIME DEPOSITS TIME SERIES TRANSITION ECONOMIES VALUATION Demirguc-Kunt, Asli Detragiache, Enrica Gupta, Poonam Inside the Crisis : An Empirical Analysis of Banking Systems in Distress |
| relation |
Policy Research Working Paper;No. 2431 |
| description |
Much of the substantial literature on
banking crises, focuses on early warning indicators. The
authors look at what happens to the economy, and the banking
sector after a banking crisis breaks out. Much of the theory
of banking crises assigns a central role to depositor runs,
with vulnerability to runs viewed as a basic characteristic
of banks as financial intermediaries. But banking systems
can be financially distressed, even when depositors do not
withdraw their deposits, if other bank creditors rush for
the exit, or if banks become insolvent. Are contemporary
banking crises characterized by large declines in deposits?
The authors find that contemporary banking crises are not
accompanied by declines in aggregate bank deposits, and
credit does not fall relative to output, but the growth of
both deposits, and credit does slow down substantially.
Output recovery begins the second year after the crisis, and
is not led by a resumption of credit growth. Instead, banks
(including the stronger banks) reallocate their asset
portfolio away from loans. This suggests that protecting
deposits during a banking crisis, may not be enough to
protect bank credit, as lack of usable collateral, and poor
borrower creditworthiness, discourage banks from lending.
However, protecting bank credit may not be a priority right
after a crisis, as the real economy can rebound without it,
at least while there is substantial under-used capacity. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Demirguc-Kunt, Asli Detragiache, Enrica Gupta, Poonam |
| author_facet |
Demirguc-Kunt, Asli Detragiache, Enrica Gupta, Poonam |
| author_sort |
Demirguc-Kunt, Asli |
| title |
Inside the Crisis : An Empirical Analysis of Banking Systems in Distress |
| title_short |
Inside the Crisis : An Empirical Analysis of Banking Systems in Distress |
| title_full |
Inside the Crisis : An Empirical Analysis of Banking Systems in Distress |
| title_fullStr |
Inside the Crisis : An Empirical Analysis of Banking Systems in Distress |
| title_full_unstemmed |
Inside the Crisis : An Empirical Analysis of Banking Systems in Distress |
| title_sort |
inside the crisis : an empirical analysis of banking systems in distress |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2000/08/693219/inside-crisis-empirical-analysis-banking-systems-distress http://hdl.handle.net/10986/19812 |
| _version_ |
1764441453235273728 |