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Resolution of Banking Crises: The Good, the Bad, and the Ugly

Author/Editor: Laeven, Luc | Valencia, Fabian
Authorized for Distribution: June 1, 2010
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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 presents a new database of systemic banking crises for the period 1970-2009. While there are many commonalities between recent and past crises, both in terms of underlying causes and policy responses, there are some important differences in terms of the scale and scope of interventions. Direct fiscal costs to support the financial sector were smaller this time as a consequence of swift policy action and significant indirect support from expansionary monetary and fiscal policy, the widespread use of guarantees on liabilities, and direct purchases of assets. While these policies have reduced the real impact of the current crisis, they have increased the burden of public debt and the size of government contingent liabilities, raising concerns about fiscal sustainability in some countries.
 
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Series: Working Paper No. 10/146
Subject(s): Banking crisis | Debt burden | Global Financial Crisis 2008-2009 | Gross domestic product | Fiscal sustainability | Fiscal policy | Monetary policy
Author's keyword(s): banking crisis; government intervention; crisis resolution; macroeconomic policy
 
English  
    Published:   June 1, 2010        
            Format:   Paper
    Stock No:   WPIEA2010146   Pages:   35
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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