Abstract

http://ssrn.com/abstract=776745
 
 

References (31)



 
 

Citations (2)



 


 



The Real Effect of Banking Crises


Giovanni Dell'Ariccia


International Monetary Fund (IMF) - Research Department; Centre for Economic Policy Research (CEPR)

Enrica Detragiache


International Monetary Fund (IMF) - European Department

Raghuram G. Rajan


University of Chicago - Booth School of Business; International Monetary Fund (IMF); National Bureau of Economic Research (NBER)

May 2005

CEPR Discussion Paper No. 5088

Abstract:     
Banking crises are usually followed by a decline in credit and growth. Is this because crises tend to take place during economic downturns, or do banking sector problems have independent negative effects on the economy? To answer this question we examine industrial sectors with differing needs for financing. If banking crises have an exogenous detrimental effect on real activity, then sectors more dependent on external finance should perform relatively worse during banking crises. The evidence in this paper supports this view. Additional support comes from the fact that sectors that predominantly have small firms, and thus are typically bank dependent, also perform relatively worse during banking crises. The differential effects across sectors are stronger in developing countries, in countries with less access to foreign finance, and where banking crises were more severe.

Number of Pages in PDF File: 49

Keywords: Banking crises, bank lending channel

JEL Classification: E44, G21

working papers series





Date posted: October 12, 2005  

Suggested Citation

Dell'Ariccia, Giovanni and Detragiache, Enrica and Rajan, Raghuram G., The Real Effect of Banking Crises (May 2005). CEPR Discussion Paper No. 5088. Available at SSRN: http://ssrn.com/abstract=776745

Contact Information

Giovanni Dell'Ariccia (Contact Author)
International Monetary Fund (IMF) - Research Department ( email )
700 19th Street NW
Washington, DC 20431
United States
202-623-8135 (Phone)
202-623-4352 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Enrica Detragiache
International Monetary Fund (IMF) - European Department ( email )
700 19th Street NW
Washington, DC 20431
United States
Raghuram G. Rajan
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-4437 (Phone)
773-702-0458 (Fax)
International Monetary Fund (IMF) ( email )
700 19th Street NW
Washington, DC 20431
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
773-702-9299 (Phone)
773-702-0458 (Fax)
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