Leading Indicators of Banking Crises: Was Asia Different?

June 1, 1998

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 episodes of the banking system distress and crisis in a large sample of countries. The empirical results identify several macroeconomic and financial variables as useful leading indicators. The main macroeconomic indicators were of limited value in predicting the Asian crises; the best warning signs were proxies for the vulnerability of the banking and corporate sector. Full-blown banking crises are shown to be more associated with external developments, and domestic variables are the main leading indicators of severe but contained banking distress.

Subject: Banking crises, Commercial banks, Financial crises, Financial institutions, Financial services, Foreign exchange, Real effective exchange rates, Real interest rates

Keywords: Asia and Pacific, Banking crises, banking crisis, banking sector crisis, banking sector difficulties, banking sector difficulty, banking sector distress, banking sector fragility, banking sector problem, banking sector variable, banking system crisis, banking system difficulties, banking system distress, Commercial banks, East Asia, exchange rate, leading indicators, Real effective exchange rates, Real interest rates, WP

Pages:
32
Volume:
1998
DOI:
---
Issue:
091
Series:
Working Paper No. 1998/091
Stock No:
WPIEA0911998
ISBN:
9781451951745
ISSN:
1018-5941

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