The Determinants of Banking Crises: A Reassessment

28 Pages Posted: 24 Jul 2015

See all articles by John H. Boyd

John H. Boyd

University of Minnesota - Twin Cities - Carlson School of Management

Gianni De Nicolo

Johns Hopkins University - Carey Business School; CESifo (Center for Economic Studies and Ifo Institute)

Tatiana Rodionova

Odessa National Mechnikov University

Date Written: July 23, 2015

Abstract

We construct theory-based measures of systemic bank shocks, which differ from “banking crisis” indicators employed in many empirical studies and use these measures to reexamine the empirical evidence on some determinants of banking crises. We show that “banking crisis” indicators actually measure (lagged) policy responses to financial distress and show that key variables such as deposit insurance and safety net guarantees have a significantly different impact on the likelihood of a systemic bank shock and that of a policy response to banking distress. These differences imply that the findings of a large empirical literature need to be re-assessed and/or reinterpreted.

Keywords: Banking Crises, Systemic Bank Shocks

JEL Classification: D5, G21

Suggested Citation

Boyd, John H. and De Nicolo, Gianni and Rodionova, Tatiana, The Determinants of Banking Crises: A Reassessment (July 23, 2015). Available at SSRN: https://ssrn.com/abstract=2635071 or http://dx.doi.org/10.2139/ssrn.2635071

John H. Boyd

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States
612-624-1834 (Phone)

Gianni De Nicolo (Contact Author)

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States
(410) 234-4507 (Phone)

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Tatiana Rodionova

Odessa National Mechnikov University ( email )

Dvoryanska, 2, office 68
Odessa, 65082
Ukraine
+380506918725 (Phone)

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