Trade and Financial Contagion in Currency Crises
March 1, 2000
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Summary
This paper investigates empirically the relevance of external, domestic, and financial weaknesses as well as trade and financial linkages in inducing financial crises for a sample of 61 emerging market and industrial countries. A panel probit estimation finds these economic indicators to be significant for emerging market countries during the Mexican, Asian, and Russian crises. In particular, the indicators of vulnerability to international financial spillover (common creditor) and of financial fragility (reserve adequacy) are highly significant and appear to explain the apparent regional concentration of these crises. Exchange rate regimes and capital controls, however, do not seem to matter.
Subject: Currency crises, Currency markets, Emerging and frontier financial markets, Exchange rate arrangements, Financial crises, Financial markets, Foreign exchange
Keywords: balance of payments crisis, contagion, crisis, crisis country, crisis emerging market economies, Currency crises, Currency markets, Emerging and frontier financial markets, emerging market, emerging market crisis, emerging markets, ERM crisis, exchange rate appreciation, Exchange rate arrangements, financial market, Global, market, trade and financial spillovers, WP
Pages:
46
Volume:
2000
DOI:
Issue:
055
Series:
Working Paper No. 2000/055
Stock No:
WPIEA0552000
ISBN:
9781451847611
ISSN:
1018-5941
