Working Paper: CEPR ID: DP1828
Authors: Barry Eichengreen; Andrew K. Rose
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.
Keywords: developing country; panel; northern interest; empirical; statistical
JEL Codes: F34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high northern interest rates (E43) | banking crises in emerging markets (F65) |
| adverse external conditions (Q54) | banking crises in emerging markets (F65) |
| rising interest rates (E43) | access to offshore funds (G23) |
| rising interest rates (E43) | moral hazard issues (G52) |
| domestic macroeconomic factors (E20) | banking crises in emerging markets (F65) |