The Price of Inconvertible Deposits: the Stock Market Boom During the Argentine Crisis

Posted: 10 Sep 2003

See all articles by Eduardo Levy Levy-Yeyati

Eduardo Levy Levy-Yeyati

Universidad Torcuato Di Tella - School of Business

Sergio L. Schmukler

World Bank - Development Research Group (DECRG)

Neeltje van Horen

Bank of England; Centre for Economic Policy Research (CEPR)

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Abstract

The Argentine crisis witnessed, among other things, a deposit run, the suspension of deposit convertibility, and a boom in the stock market. We argue that this boom reflects the cost that depositors were willing to incur to get their money out of the banking system, in light of the impending risks. This boom was generalized to all stocks and more pronounced in liquid stocks. Furthermore, the boom was a symptom that deposits were effectively restricted and that investors were not able to circumvent capital controls.

Keywords: Financial crisis, banking crisis, ADRs, Argentina, capital outflows

JEL Classification: F3, G1

Suggested Citation

Levy-Yeyati, Eduardo Levy and Schmukler, Sergio and van Horen, Neeltje, The Price of Inconvertible Deposits: the Stock Market Boom During the Argentine Crisis. Economics Letters, Vol. 83, No. 1, pp. 7-13, 2004. Available at SSRN: https://ssrn.com/abstract=442000

Eduardo Levy Levy-Yeyati (Contact Author)

Universidad Torcuato Di Tella - School of Business ( email )

Saenz Valiente 1010
C1428BIJ Buenos Aires
Argentina

Sergio Schmukler

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN MC 3-301
Washington, DC 20433
United States
202-458-4167 (Phone)
202-522-3518 (Fax)

HOME PAGE: http://www.worldbank.org/en/about/people/s/sergio-schmukler

Neeltje Van Horen

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

HOME PAGE: http://https://www.bankofengland.co.uk/research/Researchers/neeltje-van-horen

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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