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Banking crises, regulation, and growth: the case of Russia

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  • Ulrich Thiessen

Abstract

Recent empirical analyses of the relationship between financial system development and economic growth find that financial system development causes economic growth, is a good predictor of growth and that its impact is relatively large. Moreover, the empirical literature predicts that the adverse effects of banking crises on economic growth will rise in the absence of an adequate response by the government. Hence, given the Russian government's failure to respond adequately to the 1998 banking crisis, Russia's strong economic growth since the crisis is a puzzle. This study uses simulations to conclude that the growth costs of the 1998 crisis were larger than previously suggested. The adverse effects were compensated by expansionary effects. The findings corroborate the importance of financial development in promoting growth in transition countries.

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  • Ulrich Thiessen, 2005. "Banking crises, regulation, and growth: the case of Russia," Applied Economics, Taylor & Francis Journals, vol. 37(19), pages 2191-2203.
    • Handle: RePEc:taf:applec:v:37:y:2005:i:19:p:2191-2203
    DOI: 10.1080/00036840500330474
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    Cited by:

    1. Dobromił Serwa, 2012. "Banking crises and nonlinear linkages between credit and output," Applied Economics, Taylor & Francis Journals, vol. 44(8), pages 1025-1040, March.
    2. Hasanov, Fakhri & Huseynov, Fariz, 2013. "Bank credits and non-oil economic growth: Evidence from Azerbaijan," International Review of Economics & Finance, Elsevier, vol. 27(C), pages 597-610.

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