What drives financial crises in emerging markets?
Komulainen, Tuomas; Lukkarila, Johanna (01.08.2003)
Numero
5/2003Julkaisija
Bank of Finland
2003
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-201408072225Tiivistelmä
The study examines the causes of financial crises in 31 emerging market countries during 1980 2001.It estimates a probit model using 23 macroeconomic and financial sector variables.Traditional variables such as unemployment and inflation, as well as several indicators of indebtedness such as private sector liabilities and the foreign liabilities of banks explain currency crises rather well, and it appears currency crises occur in tandem with banking crises.Indeed, in emerging market countries the vulnerability to crisis is exacerbated by situations involving large liabilities that permit sudden capital outflows.Increases in indebtedness followed the liberalization of capital flows and domestic financial sectors. Author Keywords: Currency crises; Banking crises; Emerging markets; Liberalization; Probit model JEL classification codes: F31; F32; F41; F47
Julkaisuhuomautus
Published in Emerging Markets Review vol 4, no 3 (2003), pp. 248-272