Assessing Banking and Currency Crisis Risk in Small States : An application to the Eastern Caribbean Currency Union /

To complement the early warning signals literature, we study the determinants of banking and currency crises for small states and currency boards. Building on the crisis dataset by Laeven and Valencia (2020), we estimate a binominal logit model to identify the determinants of crises, and as a case s...

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Bibliographische Detailangaben
1. Verfasser: Pizzinelli, Carlo
Weitere Verfasser: Ishi, Kotaro, Khan, Tariq
Format: Zeitschrift
Sprache:English
Veröffentlicht: Washington, D.C. : International Monetary Fund, 2021.
Schriftenreihe:IMF Working Papers; Working Paper ; No. 2021/276
Schlagworte:
Online Zugang:Full text available on IMF
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100 1 |a Pizzinelli, Carlo. 
245 1 0 |a Assessing Banking and Currency Crisis Risk in Small States :   |b An application to the Eastern Caribbean Currency Union /  |c Carlo Pizzinelli, Kotaro Ishi, Tariq Khan. 
264 1 |a Washington, D.C. :  |b International Monetary Fund,  |c 2021. 
300 |a 1 online resource (34 pages) 
490 1 |a IMF Working Papers 
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500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
506 |a Electronic access restricted to authorized BRAC University faculty, staff and students 
520 3 |a To complement the early warning signals literature, we study the determinants of banking and currency crises for small states and currency boards. Building on the crisis dataset by Laeven and Valencia (2020), we estimate a binominal logit model to identify the determinants of crises, and as a case study, we apply our models to the Eastern Caribbean Currency Union (ECCU). Our findings largely confirm past studies' results that both external and domestic fundamentals matter in predicting crisis likelihood, but we find that small states and fixed exchange rate regimes are more sensitive to these fundamentals, compared to larger economies. Our empirical results also suggest that for currency board economies, keeping a high level of the foreign reserve cover-the 'backing ratio' defined as official foreign reserves as a share of central bank demand liabilities-is critical to reduce the likelihood of both banking and currency crises. The backing ratio is particularly important during years of global economic downturn. 
538 |a Mode of access: Internet 
650 7 |a Banking Crises, Currency Crises and Early Warning Signals  |2 imf 
650 7 |a Current Account Adjustment  |2 imf 
650 7 |a Financial Crises  |2 imf 
650 7 |a Forecasting and Other Model Applications  |2 imf 
650 7 |a Short-Term Capital Movements  |2 imf 
700 1 |a Ishi, Kotaro. 
700 1 |a Khan, Tariq. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2021/276 
856 4 0 |z Full text available on IMF  |u http://elibrary.imf.org/view/journals/001/2021/276/001.2021.issue-276-en.xml  |z IMF e-Library