DP1828 | Staying Afloat When the Wind Shifts: External Factors and Emerging-Market Banking Crises

Publication Date

30/04/1998

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Abstract

We analyse banking crises using a panel of macroeconomic and financial data for more than 100 developing countries from 1975 through 1992. We find that banking crises in emerging markets are strongly associated with adverse external conditions. In particular, high Northern interest rates are strongly associated with the onset of banking crises in developing countries, even after taking into account a host of internal macroeconomic factors.