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Commodity Price Movements and Banking Crises

2018-07-06 Business & Economics
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Release : 2018-07-06
Genre : Business & Economics
Kind : eBook
Book Rating : 820/5 ( reviews)

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Book Synopsis Commodity Price Movements and Banking Crises by : Mr.Markus Eberhardt

Download or read book Commodity Price Movements and Banking Crises written by Mr.Markus Eberhardt. This book was released on 2018-07-06. Available in PDF, EPUB and Kindle. Book excerpt: We develop an empirical model to predict banking crises in a sample of 60 low-income countries (LICs) over the 1981-2015 period. Given the recent emergence of financial sector stress associated with low commodity prices in several LICs, we assign price movements in primary commodities a key role in our model. Accounting for changes in commodity prices significantly increases the predictive power of the model. The commodity price effect is economically substantial and robust to the inclusion of a wide array of potential drivers of banking crises. We confirm that net capital inflows increase the likelihood of a crisis; however, in contrast to recent findings for advanced and emerging economies, credit growth and capital flow surges play no significant role in predicting banking crises in LICs.

Commodity Price Movements and Banking Crises

2021 Banks and banking
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Release : 2021
Genre : Banks and banking
Kind : eBook
Book Rating : /5 ( reviews)

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Book Synopsis Commodity Price Movements and Banking Crises by : Markus Eberhardt

Download or read book Commodity Price Movements and Banking Crises written by Markus Eberhardt. This book was released on 2021. Available in PDF, EPUB and Kindle. Book excerpt: Commodity prices are one of the most important drivers of output fluctuations in developing countries. We show that a major channel through which commodity price movements can affect the real economy is through their effect on banks' balance sheets and financial stability. Our analysis finds that the volatility of commodity prices is a significant predictor of banking crises in a sample of 60 low-income countries (LICs). In contrast to recent findings for advanced and emerging economies, credit booms and capital inflows do not play a significant role in predicting banking crises, consistent with a lack of de facto financial liberalization in LICs. We corroborate our main findings with historical data for 40 "peripheral" economies between 1848 and 1938. The effect of commodity price volatility on banking crises is concentrated in LICs with a fixed exchange rate regime and a high share of primary goods in production. We also find that commodity price volatility is likely to trigger financial instability through a reduction in government revenues and a shortening of sovereign debt maturity, which are likely to weaken banks' balance sheets.

Commodity Price Shocks and Financial Sector Fragility

2016-02-01 Business & Economics
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Release : 2016-02-01
Genre : Business & Economics
Kind : eBook
Book Rating : 725/5 ( reviews)

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Book Synopsis Commodity Price Shocks and Financial Sector Fragility by : Mr.Tidiane Kinda

Download or read book Commodity Price Shocks and Financial Sector Fragility written by Mr.Tidiane Kinda. This book was released on 2016-02-01. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the impact of commodity price shocks on financial sector fragility. Using a large sample of 71 commodity exporters among emerging and developing economies, it shows that negative shocks to commodity prices tend to weaken the financial sector, with larger shocks having more pronounced impacts. More specifically, negative commodity price shocks are associated with higher non-performing loans, bank costs and banking crises, while they reduce bank profits, liquidity, and provisions to nonperforming loans. These adverse effects tend to occur in countries with poor quality of governance, weak fiscal space, as well as those that do not have a sovereign wealth fund, do not implement macro-prudential policies and do not have a diversified export base. These findings are robust to a battery of robustness checks.

This Time Is Different

2011-08-07 Business & Economics
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Release : 2011-08-07
Genre : Business & Economics
Kind : eBook
Book Rating : 640/5 ( reviews)

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Book Synopsis This Time Is Different by : Carmen M. Reinhart

Download or read book This Time Is Different written by Carmen M. Reinhart. This book was released on 2011-08-07. Available in PDF, EPUB and Kindle. Book excerpt: An empirical investigation of financial crises during the last 800 years.

Understanding Financial Crises

2009-04-02 Business & Economics
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Release : 2009-04-02
Genre : Business & Economics
Kind : eBook
Book Rating : 869/5 ( reviews)

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Book Synopsis Understanding Financial Crises by : Franklin Allen

Download or read book Understanding Financial Crises written by Franklin Allen. This book was released on 2009-04-02. Available in PDF, EPUB and Kindle. Book excerpt: What causes a financial crisis? Can financial crises be anticipated or even avoided? What can be done to lessen their impact? Should governments and international institutions intervene? Or should financial crises be left to run their course? In the aftermath of the Asian financial crisis, many blamed international institutions, corruption, governments, and flawed macro and microeconomic policies not only for causing the crisis but also unnecessarily lengthening and deepening it. Based on ten years of research, the authors develop a theoretical approach to analyzing financial crises. Beginning with a review of the history of financial crises and providing readers with the basic economic tools needed to understand the literature, the authors construct a series of increasingly sophisticated models. Throughout, the authors guide the reader through the existing theoretical and empirical literature while also building on their own theoretical approach. The text presents the modern theory of intermediation, introduces asset markets and the causes of asset price volatility, and discusses the interaction of banks and markets. The book also deals with more specialized topics, including optimal financial regulation, bubbles, and financial contagion.

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