Working Paper: CEPR ID: DP14569
Authors: Luc Laeven; Fabian Valencia
Abstract: This paper updates the database on systemic banking crises presented in Laeven and Valencia (2013a). Drawing on 151 systemic banking crises episodes around the globe during 1970-2017, the database includes information on crisis dates, policy responses to resolve banking crises, and the fiscal and output costs of crises. We provide new evidence that crises in high-income countries tend to last longer and be associated with higher output losses, lower fiscal costs, and more extensive use of bank guarantees and expansionary macro policies than crises in low- and middle-income countries. We complement the banking crises dates with sovereign debt and currency crises dates to find that sovereign debt and currency crises tend to coincide with or follow banking crises.
Keywords: banking crisis; financial crisis; bank restructuring; crisis resolution
JEL Codes: E50; E60; G20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Income level of a country (O57) | Nature and impact of banking crises (F65) |
| Systemic banking crises in high-income countries (F65) | Longer durations of crises (H12) |
| Systemic banking crises in high-income countries (F65) | Higher output losses (H21) |
| Systemic banking crises in high-income countries (F65) | Lower fiscal costs (H39) |
| Systemic banking crises in high-income countries (F65) | More extensive use of bank guarantees and expansionary macro policies (E69) |
| Availability of fiscal and monetary space (E62) | Implementation of countercyclical policies (E63) |
| Countercyclical policies (E63) | Mitigation of real economic impact of crises (H12) |
| Borrowing constraints (F34) | Procyclical actions (E32) |
| Direct fiscal costs of banking crises (F65) | Larger in low and middle-income countries (O15) |
| Broader measure of fiscal costs (including public debt increases) (H69) | More pronounced increases in public indebtedness in high-income countries (H69) |