Real Effects of Banking Crises: Imports of Capital Goods by Developing Countries

17 Pages Posted: 29 Aug 2018

See all articles by Nektarios Michail

Nektarios Michail

Cyprus University of Technology

Andreas Savvides

Cyprus University of Technology

Date Written: August 2018

Abstract

We examine the hypothesis that banking crises have real effects on developing economies by reducing imports of capital goods. We test this hypothesis by estimating a model for the determinants of imports of capital goods by a panel of developing economies during 1961 to 2010. Our results suggest that not only do banking crises have statistically significant and economically important effects on imports of capital goods, but these effects increase the longer a banking crisis lasts. Imports of capital goods are a critical component of the capital stock and the production process in developing economies and, thus, our results highlight one important channel through which banking crises may hamper the growth prospects of these economies.

Suggested Citation

Michail, Nektarios and Savvides, Andreas, Real Effects of Banking Crises: Imports of Capital Goods by Developing Countries (August 2018). Review of Development Economics, Vol. 22, Issue 3, pp. 1343-1359, 2018, Available at SSRN: https://ssrn.com/abstract=3240125 or http://dx.doi.org/10.1111/rode.12399

Nektarios Michail (Contact Author)

Cyprus University of Technology ( email )

Limassol, 3603
Cyprus

Andreas Savvides

Cyprus University of Technology ( email )

Limassol, 3603
Cyprus

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1
Abstract Views
100
PlumX Metrics