29 Pages Posted: 29 Jan 2006
Date Written: May 2001
This paper shows that the quality of banks within each country is one of the important factors that can account for the fact that developing economies tend to suffer more severe output contractions in the wake of a currency crisis than more mature economies. In particular, countries with a banking sector whose balance sheets are healthy, in terms of having high net worth and low foreign currency exposure, are much less likely to suffer a contraction in the wake of an unexpected depreciation.
Keywords: currency crisis, banking crisis, foreign currency debt, balance sheet, output
JEL Classification: E44, E50, F32, F34
Suggested Citation: Suggested Citation
Disyatat, Piti, Currency Crises and the Real Economy: The Role of Banks (May 2001). IMF Working Paper, Vol. , pp. 1-29, 2001. Available at SSRN: https://ssrn.com/abstract=879447