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4 (1) 2014

Determinants of banking crisis in developing countries


Author - Affiliation:
Nguyen Van Phuc - Ho Chi Minh City Open University , Vietnam
Luong Duy Quang - Ho Chi Minh City Open University , Vietnam
Corresponding author: Luong Duy Quang - phuc.nv@ou.edu.vn

Abstract
This paper identifies determinants associated with probability of banking crisis in developing countries. By using data sample of more than 80 developing countries around the world from 1974 to 2002, the results from our mutivariate logit economitric model indicate that systemic banking crisis tend to erupt as macro-conditions are weak, especially when economies experience low GDP growth and high inflation. Moreover, also find that the banking sector becomes sensitive to the crisis as the credit growth booming. Besides, other financial macro variables such as high real interest rate and exchange rate are also confirmed to be associated with risk of crisis.


Keywords
Banking crisis; financial distress; event method; liquidity; developing countries

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DOI: https://doi.org/10.46223/HCMCOUJS.econ.en.4.1.85.2014
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