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Financial measures and banking crisis: New evidence

Author

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  • Bojaj, Martin M.
  • Aharon, David Y.

Abstract

This paper assesses the power of measures related to the financial cycle to predict the probability of a banking crisis. Data are at a yearly frequency, span the period 1980–2020, and cover 196 countries. The standardized cumulative credit-to-GDP ratio is important for advanced economies and to a lesser extent for low-income developing countries, but it is not for emerging economies. IMF and World Bank policymakers and analysts need to take a more comprehensive approach to evaluating financial stability and systemic vulnerabilities in emerging economies and low-income developing countries because of their financial institutions’ deep informal banking sector.

Suggested Citation

  • Bojaj, Martin M. & Aharon, David Y., 2024. "Financial measures and banking crisis: New evidence," Finance Research Letters, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:finlet:v:70:y:2024:i:c:s1544612324013552
    DOI: 10.1016/j.frl.2024.106326
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    More about this item

    Keywords

    Banking crisis; Financial measures; Logit; Forecasting;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation

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