IMF Working Papers

Structural Vulnerabilities and Currency Crises

By Swart R. Ghosh, Atish R. Ghosh

January 1, 2002

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Swart R. Ghosh, and Atish R. Ghosh Structural Vulnerabilities and Currency Crises, (USA: International Monetary Fund, 2002) accessed September 18, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the role of structural factors—governance and rule of law, corporate sector governance (creditor rights and shareholder rights), corporate financing structure—as well as macroeconomic variables in currency crises. Using a technique known as a binary recursive tree allows for interactions between the various explanatory variables. It is found that structural vulnerabilities play an important role in the occurrence of “deep” currency crises (those with a real GDP growth decline of at least 3 percentage points) and that there are complex interactions between these structural vulnerabilities and macroeconomic imbalances.

Subject: Balance of payments, Corporate governance, Currency crises, Current account balance, Current account deficits, Economic sectors, Financial crises, Public sector

Keywords: Balance of payments crisis, Binary recursive trees, BOP crisis, Cash flow, Corporate governance, Countries in the sense, Country surveillance work, Creditor right, Crisis case, Crisis country, Crisis definition, Currency crises, Currency crisis, Current account balance, Current account deficit, Current account deficits, Debt-equity ratio, East Asia, Governance index, Probability of a crisis, Public sector, Short-term debt, Structural indicators, WP

Publication Details

  • Pages:

    31

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2002/009

  • Stock No:

    WPIEA0092002

  • ISBN:

    9781451842609

  • ISSN:

    1018-5941