Identifying Banking Crises

Baron, Matthew; Verner, Emil; Xiong, Wei

doi:10.2139/ssrn.3116148

Cited by 10 publications

(9 citation statements)

References 137 publications

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“…Hence, weak fundamentals in the banking system already manifest themselves one year before the start of the full blown crisis. A similar pattern is also identified in Baron et al (2018) for bank stock index returns and here in panel one for profits to GDP and dividends to GDP. Once the crisis hits,…”

Section: Stylized Factssupporting

confidence: 84%

The Profit-Credit Cycle

Richter

Zimmermann

2018

SSRN Journal

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Section: Stylized Factssupporting

confidence: 84%

The Profit-Credit Cycle

Richter

Zimmermann

2018

SSRN Journal

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“…Large standard errors, however, render this di↵erence statistically insignificant. We confirm the finding that leaning policy cannot be relied upon to lessen crisis severity on the basis of the banking crisis dummies defined by Reinhart and Rogo↵ (2011) and Baron, Verner and Xiong (2018) (see online Appendix B). ings lend support to the concern that contractionary monetary policy increases financial crisis risk rather than reducing it.…”

Section: Ivb the E↵ect Of Law On Crisis Severitysupporting

confidence: 81%

“…This binary indicator is a narrative crisis measure that takes the value 1 in years in which a country experienced bank runs, bank defaults, forced mergers, or major public interventions in the financial sector. As a robustness check, we also consider the banking crisis dummies defined by Reinhart and Rogo↵ (2011) and Baron, Verner and Xiong (2018) (see online Appendix B). Regardless of the crisis indicator chosen, we obtain very similar results.…”

Section: Datamentioning

confidence: 99%

Leaning against the Wind and Crisis Risk

Schularick

Steege

Ward

2021

American Economic Review: Insights

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Can central banks defuse rising stability risks in financial booms by leaning against the wind with higher interest rates? This paper studies the state-dependent effects of monetary policy on financial crisis risk. Based on the near-universe of advanced economy financial cycles since the nineteenth century, we show that discretionary leaning against the wind policies during credit and asset price booms are more likely to trigger crises than prevent them. (JEL E43, E44, E52, E58, F33)

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“…According to the European Central Bank (ECB) the cumulative decline of banks between 2008 and 2016 reached 25 percent, while Greece, along with the Netherlands, Cyprus and Spain, recorded the largest relative decreases (ECB, 2017). In the wake of the global financial crisis, Greece faced a banking crisis from 2008 to 2012 and sovereign debt crises with its 2012 debt restructuring and the 2015 default to the International Monetary Fund (IMF) (Baron et al, 2018;Laeven and Valencia, 2018). Reinhart and Rogoff (2014) assert that in Greece prevailed the twin crisis scenario, which had previously occurred in a number of advanced economy crises during the 1930s.…”

Section: Introductionmentioning

confidence: 99%

Bank mergers and acquisitions in Greece: the financial crisis and its effect on shareholder wealth

Tampakoudis

Nerantzidis

Subeniotis

et al. 2019

IJMF

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Purpose The purpose of this paper is to investigate the wealth implications of bank mergers and acquisitions (M&As) in the unique Greek setting given the triple crisis phenomenon – banking, sovereign debt and economic crises – that prevailed after the global financial crisis. Design/methodology/approach The study examines bank M&As and bank transactions over the period from 1997 to 2018, as well as government-assisted M&As during the crisis. The wealth effects of bank M&As are assessed using both univariate and multivariate frameworks. Findings Findings show a neutral crisis effect on the valuation of M&As upon their announcement. However, the authors provide conclusive evidence that M&A completions are value-destroying events for acquiring banks during the crisis, far worse than in the pre-crisis period. Greek banks also fail to create value from government-assisted mergers. The results suggest that the financial stability and the prevention of further deepening of the Greek crisis with possible contagion effects were achieved at the expense of shareholders and taxpayers. Originality/value To the authors’ knowledge, this is the first study that examines the impact of the Greek triple crisis on the wealth effects of bank M&As and bank transactions. Also, the study provides first evidence with regard to the economic impact of government-assisted M&As in the European context.

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Identifying Banking Crises

Cited by 10 publications

References 137 publications

The Profit-Credit Cycle

The Profit-Credit Cycle

Leaning against the Wind and Crisis Risk

Bank mergers and acquisitions in Greece: the financial crisis and its effect on shareholder wealth

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