Banking crises and crisis dating

banking crises and crisis dating - Consider policy interventions in the banking sector to be significant if at least three out of the following six measures have been used:31)deposit freezes and/or bank holidays 2)significant bank nationalizations 3)bank restructuring gross costs (at least 3 percent of gdp) 4)extensive liquidity support (5 percent of deposits and liabilities to nonresidents) 5)significant guarantees put in place 6)significant asset purchases (at least 5 percent of gdp) in essence, all policy interventions to resolve a banking crisis can be classified into the above six categories (see honohan and laeven, 2005, and laeven and valencia, 2008). This may be the case if currency depreciation at the onset of the crisis increases the domestic currency value of foreign-currency-denominated outstanding loans, as in many emerging market crises, or because loans are rolled over and held at book values in banks’ balance sheets for several years before they are written off (as was the case with the “zombie” banks during the 1990s crisis in japan). Therefore, we consider a sufficient condition for a crisis episode to be deemed systemic when either (i) a country's banking system exhibits significant losses resulting in a share of nonperforming loans (npls) above 20 percent or bank closures of at least 20 percent of banking system assets or (ii) fiscal restructuring costs of the banking sector are sufficiently high, exceeding 5 percent of gdp. Addition to the dating of banking crisis episodes, we also present information on the economic costs and policy responses associated with banking crises for a subset of the 147 episodes identified, allowing for a comparison of the policy mix used to resolve banking crises and an assessment of the real effects of banking crises.

The Banking Crisis | Declassified

The financial crisis of 2008 brought about the biggest economic downturn since the Great Depression. But why did it happen and ...