Currency Crises and the Real Economy: The Role of Banks

29 Pages Posted: 11 Aug 2009

See all articles by Piti Disyatat

Piti Disyatat

International Monetary Fund (IMF) - Research Department

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Date Written: May 2001

Abstract

This paper shows that the quality of banks within each country is one of the important factors that can account for the fact that developing economies tend to suffer more severe output contractions in the wake of a currency crisis than more mature economies. In particular, countries with a banking sector whose balance sheets are healthy, in terms of having high net worth and low foreign currency exposure, are much less likely to suffer a contraction in the wake of an unexpected depreciation.

Keywords: Financial crisis, Banks, Financial sector, External debt, Economic models

Suggested Citation

Disyatat, Piti, Currency Crises and the Real Economy: The Role of Banks (May 2001). IMF Working Papers, Vol. , pp. 1-28, 2001. Available at SSRN: https://ssrn.com/abstract=1445783

Piti Disyatat (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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