How to foresee banking crises? A survey of the empirical literature

Kauko, Karlo

doi:10.1016/j.ecosys.2014.01.001

Cited by 72 publications

(47 citation statements)

References 71 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This finding is consistent with the literature survey by Kauko (2014), who suggests that higher inflation has a positive correlation with bank risk in emerging economies. The positive and significant coefficients of Stock Market Capitalization show that bank risk-taking is higher when capital markets are more developed in a country.…”

Section: Openness and Bank Risk-takingsupporting

confidence: 83%

Trade Openness and Bank Risk-Taking Behavior: Evidence from Emerging Economies

Ashraf

Arshad

Liang

2017

JRFM

View full text Add to dashboard Cite

Abstract:In this paper, we examine the impact of trade openness on bank risk-taking behavior. Using a panel dataset of 291 banks from 37 emerging countries over the period from 1998 to 2012, we find that higher trade openness decreases bank risk-taking. The results are robust when we use alternative bank risk-taking proxies and alternative estimation methods. We argue that trade openness provides diversification opportunities to banks in lending activities, which decrease overall bank risk. Further to this end, we observe that higher trade openness helps domestic banks to smooth out income volatility and decreases the impact of a financial crisis on banks.

show abstract

Section: Openness and Bank Risk-takingsupporting

confidence: 83%

Trade Openness and Bank Risk-Taking Behavior: Evidence from Emerging Economies

Ashraf

Arshad

Liang

2017

JRFM

View full text Add to dashboard Cite

show abstract

“…Moreover, the idea that a current account surplus is an almost perfect deterrent of banking crises is corroborated by e.g. the tables presented by Laeven and Valencia (2008) and various publications reviewed by Kauko (2014). Babecký et al aim to deal with model uncertainty inherent to EWS by means of Bayesian model averaging (Madigan and Raftery, 1994;Raftery, 1995Raftery, , 1996.…”

Section: Dj P mentioning

confidence: 77%

“…Moreover, the literature improved the toolkits with methods such as non-parametric clustering methods like the binary recursive tree method (Barrel et al 2009). A recent extensive literature review of both old and new publications is presented for example by Kauko (2014) and Mayes and Stremmel (2014).…”

Section: Related Literaturementioning

confidence: 99%

Comparing Different Early Warning Systems: Results from a Horse Race Competition Among Members of the Macro-Prudential Research Network

et al. 2015

Self Cite

View full text Add to dashboard Cite

Over the recent decades researchers in academia and central banks have developed early warning systems (EWS) designed to warn policy makers of potential future economic and financial crises. These EWS are based on diverse approaches and empirical models. In this paper we compare the performance of nine distinct models for predicting banking crises resulting from the work of the Macroprudential Research Network (MaRs) initiated by the European System of Central Banks. In order to ensure comparability, all models use the same database of crises created by MaRs and comparable sets of potential early warning indicators. We evaluate the models' relative usefulness by comparing the ratios of false alarms and missed crises and discuss implications for pratical use and future research. We find that multivariate models, in their many appearances, have great potential added value over simple signalling models. One of the main policy recommendations coming from this exercise is that policy makers can benefit from taking a broad methodological approach when they develop models to set macro-prudential instruments.The obligatory copyright note: We certify that we have the right to deposit the contribution with MPRA.

show abstract

“…Bauer and Granziera (2016), Laséen and Pescatori (2016), Alpanda and Ueberfeldt (2016), Ajello, Laubach, Lopez-Salido, and Nakata (2016) as well as Svensson (2017) and Gerdrup et al (2017). 3 See Kauko (2014) for a recent survey of the early warning literature. Barrell, Davis, Karim, and Liadze (2010) note that the focus on credit as a crisis predictor may have been driven by access to data for emerging markets.…”

Section: Introductionmentioning

confidence: 99%