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Title:Banking and balance of payments crises: On possible causes of the twin crises PDF Logo
Authors:Buch, Claudia M.
Heinrich, Ralph P.
Issue Date:1998
Series/Report no.:Kiel Working Papers 848
Abstract:Banking and balance of payments crises often happen quite simultaneously. We show that the impact of an expected devaluation on the net worth of commercial banks with a short open foreign exchange position speeds up the timing of a balance of payments crisis. We employ an asymmetric information framework in which domestic commercial banks have to pay a positive risk premium on the international capital market which is determined by their net worth. Some stylized facts from selected transition and developing countries are presented in order to gauge the empirical relevance of the effects that we stress.
JEL:F31
F36
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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