Macro Financial Determinants of the Great Financial Crisis: Implications for Financial Regulation
46 Pages Posted: 23 Mar 2011 Last revised: 7 Jul 2014
Date Written: January 25, 2014
We investigate the macro financial determinants of the Great Financial Crisis of 2007-2009 using data on 83 countries from the period 1998-2006. Our results show that the probability of suffering the crisis in 2008 was larger for countries having higher levels of credit deposit ratio whereas it was lower for countries having higher levels of: i) net interest margin, ii) concentration in the banking sector, iii) restrictions to bank activities, iv) private monitoring. Our findings contribute to the ongoing discussion that can help policymakers calibrate new regulation, by achieving a reasonable trade-off between financial stability and economic growth.
Keywords: Banking Crisis, Government Intervention, Regulation
JEL Classification: G15, G18, G21
Suggested Citation: Suggested Citation