Banking Crises and Crisis Dating: Disentangling Shocks and Policy Responses

27 Pages Posted: 30 Apr 2018

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: March 3, 2018

Abstract

We construct theory-based measures of systemic bank shocks. These measures complement banking crisis indicators employed in many empirical studies, which we show capture (lagged) policy responses to systemic bank shocks. To illustrate the importance of disentangling shocks and policy responses to these shocks, we assess the impact of deposit insurance and safety net guarantees on both the probability of a systemic bank shock and that of a policy response. We find that deposit insurance and safety net guarantees do not affect the probability of a systemic bank shock, but increase the probability of a policy response to such a shock, consistent with the results of the previous literature. The joint use of measures of systemic bank shocks and policy responses may lead to a policy-relevant re-interpretation of the findings of a large empirical literature.

Keywords: Banking crises, bank fragility

JEL Classification: G21

Suggested Citation

Boyd, John H. and De Nicolo, Gianni and Rodionova, Tatiana, Banking Crises and Crisis Dating: Disentangling Shocks and Policy Responses (March 3, 2018). Available at SSRN: https://ssrn.com/abstract=3161013 or http://dx.doi.org/10.2139/ssrn.3161013

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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