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Pure Contagion Effects in International Banking: The Case of BCCI's Failure

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  • Angelos Kanas

Abstract

We test for pure contagion effects in international banking arising from the failure of the Bank of Credit and Commerce International (BCCI), one of the largest bank failures in the world. We focused on large individual banks in three developed countries where BCCI had established operations, namely the UK, the US, and Canada. Using event study methodology, we tested for contagion effects using time windows surrounding several known BCCI-related announcements. Our analysis provides strong evidence of pure contagion effects in the UK, which have arisen prior to the official closure date. In contrast, there is no evidence of pure contagion effects in the US and Canada.

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  • Angelos Kanas, 2005. "Pure Contagion Effects in International Banking: The Case of BCCI's Failure," Journal of Applied Economics, Taylor & Francis Journals, vol. 8(1), pages 101-123, May.
    • Handle: RePEc:taf:recsxx:v:8:y:2005:i:1:p:101-123
    DOI: 10.1080/15140326.2005.12040620
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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