Proceedings of the 28th International Academic Conference, Tel Aviv

SYSTEMIC BANKING CRISIS AND MACROECONOMIC LEADING INDICATORS

JOHAN WINBLADH

Abstract:

The purpose of this study is to identify leading macroeconomic indicators causing or coinciding with systemic banking crises. The clear focus on systemic banking crisis leave little ambiguity of what constitutes a banking crisis. The macroeconomic leading indicators are chosen with economic theory in mind. The indicators are tested using multivariate regression with a dichotomous variable for systemic banking crisis or no systemic banking crisis. The results shows that inflation is the strongest leading indicator coinciding with systemic banking crisis in both advanced economies as well as in South American middle income economies. Inflation is a broad indicator of general economic difficulties as well as for policy related issues.

Keywords: Systemic banking crisis, multivariate regression analysis, macroeconomic leading indicators, and macroeconomic fundamental problems.

DOI: 10.20472/IAC.2017.028.020

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