In this paper, we propose a theoretical model in which a banking crisis (or bank distress) causes declines in aggregate productivity. When borrowing firms need additional bank loans to continue their businesses, a high probability of bank failure discourages ex ante investments (e.g., R&D investment) by firms that enhance their productivity. In a general equilibrium setting, we also show that t...

Often, systemic banking crises initiate from one or more banks and affect countries by rapid spreading in the banking network, financial markets and economy of countries. According to Reinhart & Rogoff (2009) in the book titled "This time is Different," financial crises are pointed as an equal opportunity menace for high-income countries and emerging markets. Although The International Mo...

The coincidence of banking and currency crises associated with the Asian financial crisis has drawn renewed attention to causal and common factors linking the two phenomena. In this paper, we analyze the incidence and underlying causes of banking and currency crises in 90 industrial and developed countries over the 1975-97 period. We measure the individual and joint (“twin”) occurrence of bank ...

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The focus of this paper is two fold. Relevant aspects of the Thai crisis are evaluated. This provides the motivation for the incorporation of a fragile banking sector within a Krugman (1979)-type framework. This in turn allows for a consideration of the effects of banking sector vulnerabilities on the speed and timing of a currency collapse.

In this paper we study the relationship between leverage and risk in commercial banking market. We employ a panel data set that consists of the biggest US commercial banks and which extends from 2002 to 2010 thus covering both the years before the outbreak of the current financial crisis as well as those followed. We make clear distinctions among different leverage types like onand off-balance ...

This article identifies the main drivers in the evolution of the banking cluster in Prague over the last two centuries. Conceptually, it employs the adaptive-cycle model of cluster evolution, which acknowledges the role of external factors in cluster evolution. An empirical analysis shows that the evolution of the banking cluster in Prague has been primarily driven by several episodes of major ...

At a time when the worst global financial crisis since the 1929 Great Depression threatens the very survival of many global financial giants, the relatively better financial performance of Chinese banks stands out. This is commendable considering that these banks were “technically insolvent” not too long ago. This paper reviews China’s banking reform strategy and its implementation and analyzes...

This paper examines the consequences of branch banking for the Australian economy. There is little evidence to show that branching increased the stability of Australian banking. In 1893 Australia suffered the worst panic ever in a branch banking country. During the crisis, more extensively branched banks were more likely to suspend payments. However, it is shown that branching increased the pro...

In addition to their direct effects, episodes of financial instability may decrease investor confidence. Measuring the impact of a crisis on investor confidence is complicated by the fact that it is difficult to disentangle the effect of investor confidence from coincident direct effects of the crisis. In order to isolate the effects of financial crises on investor confidence, we study the inve...