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Determinants of banking crisis in developing countries

Author

Listed:
  • Nguyen Van Phuc

    (Ho Chi Minh City Open University, Vietnam)

  • Luong Duy Quang

    (Ho Chi Minh City Open University, Vietnam)

Abstract

This paper identifies determinants associated with probability of banking crisis in developing countries. By using data sample of more than 80 developing countries around the world from 1974 to 2002, the results from our mutivariate logit economitric model indicate that systemic banking crisis tend to erupt as macro-conditions are weak, especially when economies experience low GDP growth and high inflation. Moreover, also find that the banking sector becomes sensitive to the crisis as the credit growth booming. Besides, other financial macro variables such as high real interest rate and exchange rate are also confirmed to be associated with risk of crisis.

Suggested Citation

  • Nguyen Van Phuc & Luong Duy Quang, 2014. "Determinants of banking crisis in developing countries," HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE, HO CHI MINH CITY OPEN UNIVERSITY, vol. 4(1), pages 26-36.
    • Handle: RePEc:bjw:econen:v:4:y:2014:i:1:p:26-36
    DOI: 10.46223/HCMCOUJS.econ.en.4.1.85.2014
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    References listed on IDEAS

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    1. Ms. May Y Khamis, 1996. "Credit and Exchange Rate-Based Stabilization," IMF Working Papers 1996/051, International Monetary Fund.
    2. Demirgüç-Kunt, Asli & Kane, Edward J. & Laeven, Luc, 2008. "Determinants of deposit-insurance adoption and design," Journal of Financial Intermediation, Elsevier, vol. 17(3), pages 407-438, July.
    3. Mr. Alexander Y Kyei, 1995. "Deposit Protection Arrangements: A Survey," IMF Working Papers 1995/134, International Monetary Fund.
    4. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
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