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Resolution of Banking Crises: The Good, the Bad, and the Ugly
Author:
Mr. Luc Laeven
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Mr. Fabian Valencia
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Series:
IMF Working Papers
Volume/Issue:
Volume 2010: Issue 146
Language:
English
Publication Date:
01 Jun 2010
DOI:
https://doi.org/10.5089/9781455201297.001
ISBN:
9781455201297
ISSN:
1018-5941
Pages:
35
Keywords:
WP; bank; crisis; banking crisis; asset; financial institution
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper presents a new database of systemic banking crises for the period 1970-2009. While there are many commonalities between recent and past crises, both in terms of underlying causes and policy responses, there are some important differences in terms of the scale and scope of interventions. Direct fiscal costs to support the financial sector were smaller this time as a consequence of swift policy action and significant indirect support from expansionary monetary and fiscal policy, the widespread use of guarantees on liabilities, and direct purchases of assets. While these policies have reduced the real impact of the current crisis, they have increased the burden of public debt and the size of government contingent liabilities, raising concerns about fiscal sustainability in some countries.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund