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| dc.title | Do Surges in International Capital Inflows Influence the Likelihood of Banking Crises?: Cross-Country Evidence on Bonanzas in Capital Inflows and Bonanza-Boom-Bust Cycles |
| dc.contributor.author | Caballero, Julián |
| dc.contributor.orgunit | Department of Research and Chief Economist |
| dc.date.available | 2012-05-29T00:00:00 |
| dc.date.issue | 2012-05-01T00:00:00 |
| dc.description.abstract | This paper asks whether bonanzas (surges) in net capital inflows increase the probability of banking crises and whether this is necessarily through a lending boom mechanism. A fixed effects regression analysis indicates that a baseline bonanza, identified as a surge of one standard deviation from trend, increases the odds of a banking crisis by three times, even in the absence of a lending boom. Thus, a bonanza raises the likelihood of a crisis from an unconditional probability of 4.4 percent to 12 percent. Larger windfalls of capital (two-s.d. bonanzas) increase the odds of a crisis by eight times. The joint occurrence of a bonanza and a lending boom raises these odds even more. Decomposing flows into FDI, portfolio-equity and debt indicates that bonanzas in all flows increase the probability of crises when the windfall takes place jointly with a lending boom. Thus, windfalls in all types of flows exacerbate the deleterious effects of credit. However, surges in portfolio-equity flows seem to have an independent effect, even in the absence of a lending boom. Furthermore, emerging economies exhibit greater odds of crises after a windfall of capital. |
| dc.format.extent | 61 |
| dc.identifier.doi | http://dx.doi.org/10.18235/0011385 |
| dc.identifier.url | https://publications.iadb.org/publications/english/document/Do-Surges-in-International-Capital-Inflows-Influence-the-Likelihood-of-Banking-Crises-Cross-Country-Evidence-on-Bonanzas-in-Capital-Inflows-and-Bonanza-Boom-Bust-Cycles.pdf |
| dc.language.iso | en |
| dc.medium | Adobe PDF |
| dc.publisher | Inter-American Development Bank |
| dc.subject | Financial Sector |
| dc.subject | Financial Crisis and Structural Adjustement |
| dc.subject.jelcode | E44 - Financial Markets and the Macroeconomy |
| dc.subject.jelcode | E51 - Money Supply • Credit • Money Multipliers |
| dc.subject.jelcode | F21 - International Investment • Long-Term Capital Movements |
| dc.subject.jelcode | F32 - Current Account Adjustment • Short-Term Capital Movements |
| dc.subject.jelcode | F34 - International Lending and Debt Problems |
| dc.subject.jelcode | G01 - Financial Crises |
| dc.type | Working Papers |
| idb.identifier.pubnumber | Working Papers |
| idb.operation | RG-K1089 |