Determinants of the real impact of banking crises: A review and new evidence

Wilms, Philip; Swank, Job; Haan, Jakob de

doi:10.1016/j.najef.2017.10.005

Cited by 18 publications

(10 citation statements)

References 65 publications

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“…Based on Cecchetti et al (2009) and Wilms et al (2018), we consider in the vector

X

three sets of potential DBC determinants. Pre ‐ crisis proxies for macroeconomic, financial (including credit growth and credit boom variables) and institutional conditions preceding banking crises, and we distinguish between pre‐crisis internal and external conditions .…”

Section: Methodsmentioning

confidence: 99%

“…The first, and most popular, comes from studies on the determinants of the output cost of banking crises and is based on a pre‐crisis referential. The second is based on the dynamics of one or several variables after the outbreak of banking crises (see, e.g., Angkinand, 2008, Cecchetti et al, 2009, or Wilms et al, 2018, for surveys on the measurement of the cost of banking crises).…”

Section: Datamentioning

confidence: 99%

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Does more finance lead to longer crises?

2021

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Empirical studies emphasise that higher financial development (FD) amplifies the output cost of banking crises. However, no study has so far investigated the effect of FD on another key dimension of banking crises, namely their duration. Using a large sample of banking crises over the 1977–2014 period, we find that higher FD is associated with a significant increase in the duration of banking crises (DBC). This result is robust to a broad range of alternative specifications and is unaffected by unobserved heterogeneity or endogeneity. Finally, we show that the effect of FD on DBC is subject to nonlinearities and varies across decades and with the level of economic development.

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“…Based on Cecchetti et al (2009) and Wilms et al (2018), we consider in the vector

X

Section: Methodsmentioning

confidence: 99%

Section: Datamentioning

confidence: 99%

Does more finance lead to longer crises?

2021

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“…Regulatory and supervision practices are not helpful in bankruptcy prevention (Pereira Pedro et al, 2018; Stef & Dimelis, 2020). Wilms et al (2018) and Igharo et al (2020) asserted that liquidity support, monetary policy, and financial freedom significantly affect the subsequent mitigation process of banking crises. Manz (2019) reported that loan and asset-specific events still lack a deeper understanding and deserve rigorous research.…”

Section: Literature Reviewmentioning

confidence: 99%

Uncovering Effects of Hot Potatoes in Banking System: Arresting Die-Hard Issues

Abbass

Niazi

Basıt³

et al. 2021

Sage Open

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This study is aimed to conceptually engineer the effects of hot potatoes (bad loans) in the banking system. The study’s research design uses elementary concepts of graph theory comprising of mappings of systemic behavior of contemporary banking. Issues have been formally underpinned, described, and visualized through directed and linear graphs. Findings of the study show that it is an inherent feature of the banking system to generate hot potatoes and allow them to sit there. It creates heat in the system by way of latency, turgescence, propagation, and concurrent cyclicality. These predicaments of systemic crises of banking deteriorate the sustainability of the system. The pilot study (using classical t-Test) conducted as part of this research has validated the theoretical argument aforementioned. The study provides new insights into these die-hard issues. It helps refine the agenda of future research in banking.

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“…This historical and current excursus allows to study the speed of crisis propagation and the response to further prevent it: a better monitoring system that certainly cannot leave the cyclical and macroeconomic variables out of the ratings, given that the failure of a bank has systemic effects. Wilms et al (2018) identify 21 variables frequently used as determinants of the severity of banking crises but not yet included in the official ratings. The need to introduce a rating model closer to the new needs of the banking and financial market is therefore evident: our new "Bank-Tailored Integrated Rating" (BTIR) provides an important response in this direction.…”

Section: Stylized Facts: What the Evidence Showsmentioning

confidence: 99%

Catch the Heterogeneity: The New Bank-Tailored Integrated Rating

Arzu

Lucchetta

Mantovani

2021

JRFM

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The purpose of this article is to develop a bank-oriented rating approach, tailored by incorporating the various heterogeneity dimensions characterizing financial institutions, named “Bank-Tailored Integrated Rating” (BTIR). BTIR is able to catch the financial cycle, including the pandemic crisis, and the ongoing change in banking normative from a microeconomic perspective, and it is inherently coherent with the challenging frontier of forecasting tail risk in financial markets in similar ways as in De Nicolò and Lucchetta (2017), although their approach is macroeconomic) since it considers the downside risk in the theoretical framework. The method employed was an innovative integrated rating (IR) statistical and econometrical panel pre-selection analysis that takes into account the characteristics of risk and the greater heterogeneity of the banks. The result is a challenge rating procedure delivering forward-looking preselection requested by the new International Financial Reporting Standard (IFRS-9). The future direction is extremely promising given the increase in idiosyncratic and systemic risks in financial markets.

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Determinants of the real impact of banking crises: A review and new evidence

Cited by 18 publications

References 65 publications

Does more finance lead to longer crises?

Does more finance lead to longer crises?

Uncovering Effects of Hot Potatoes in Banking System: Arresting Die-Hard Issues

Catch the Heterogeneity: The New Bank-Tailored Integrated Rating

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