This paper provides a set of stylised facts on the mechanisms through which banking and sovereign distress feed into each other, using a large sample of emerging economies over three decades. We first define “twin crises” as events where banking crises and sovereign defaults combine, and...

We identify a set of "rules of thumb" that characterise economic, financial and structural conditions preceding the onset of banking and currency crises in 36 advanced economies over 1970–2010. We use the Classification and Regression Tree methodology (CART) and its Random Forest (RF)...

The structure of a country’s external liabilities, as well as the extent and nature of its international financial integration are key determinants of its vulnerability to financial crises. This is confirmed by new empirical analysis covering OECD and emerging economies over the past four...

We examine the relationship of banking crises with economic growth and recessions. Our data cover 21 economies from around the world, most from 1870 to 2009 with the rest starting in 1901 or earlier. The data include capital investment and human capital formation. We have two major findings....

The paper examines a wide range of potential predictors of 25 international banking crises that broke out in 2007–2011 on the basis of cross–sectional logit models and the BCT (binary classification tree) algorithm, a novel technique in assessing the causes of banking crises. The major...

This paper examines the effects that capital inflows have on the financial system in a Diamond-Dybvig environment. Here, an adverse-selection problem arises where short-term capital has the incentive to enter the domestic banking system while long-term capital chooses to stay out. Then,...

Like many countries, Spain has gone through a series of financial crises, both before and after its industrialization. There are many underlying causes for these crises, as well as for the current Spanish downturn. It is worth noting that there are similarities between recessions throughout the...

This paper aims at empirically investigating the role of moral hazard in the e¢ ctivity of deposit insurance in achieving banking stability. If the negative e¤ect of deposit insurance on banking stability is through moral hazard, then deposit insurance will be associated with banking...

In this paper we analyze empirically the relationship between different financial reforms and financial instability. We also analyze the relationship between financial liberalization and financial instability, where financial liberalization is measure as an aggregate of different financial...

Purpose – This paper aims to analyze how financial system turmoil affected unemployment in industrial countries during the period 1982 to 2003. Design/methodology/approach – The paper uses annual data on 17 industrial countries. It employs the International Monetary Fund's financial stress...