What question did this study set out to answer?

To examine the causal links, temporal sequencing, and macroeconomic precursors connecting banking sector distress and balance-of-payments crises.

June 1, 1999American Economic Review

The Twin Crises: The Causes of Banking and Balance-of-Payments Problems

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Authors

GKGraciela KaminskyAustralian National University CRCarmen ReinhartNational Bureau of Economic Research

Discussion

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Implication

Empirical macroeconomic analysis reveals banking sector distress typically precedes currency crises, indicating a self-reinforcing vicious spiral triggered after economic and credit booms.

Key Points

To examine the causal links, temporal sequencing, and macroeconomic precursors connecting banking sector distress and balance-of-payments crises.
Empirical analysis evaluating historical episodes of banking instability and currency turmoil across international markets.
Assessment of macroeconomic indicators leading into crises, including financial liberalization, credit growth, capital movements, and exchange rate valuation.
Banking crises typically precede balance-of-payments crises, and the subsequent currency collapse exacerbates banking instability to create a reinforcing vicious spiral.
Financial liberalization commonly acts as a precursor to banking distress, with crises emerging as economies transition into recession following sustained credit- and capital-inflow-fueled booms alongside overvalued currencies.

Cite This Study

Kaminsky et al. (1999) studied this question.

synapsesocial.com/papers/69dd4e8399c691022d99c082 https://doi.org/10.1257/aer.89.3.473

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June 1, 1999American Economic Review

The Twin Crises: The Causes of Banking and Balance-of-Payments Problems

View Full Paper

Ask AI

Bookmark

Authors

GKGraciela KaminskyAustralian National University CRCarmen ReinhartNational Bureau of Economic Research

Discussion

Member takes

Implication

Empirical macroeconomic analysis reveals banking sector distress typically precedes currency crises, indicating a self-reinforcing vicious spiral triggered after economic and credit booms.

Key Points

To examine the causal links, temporal sequencing, and macroeconomic precursors connecting banking sector distress and balance-of-payments crises.
Empirical analysis evaluating historical episodes of banking instability and currency turmoil across international markets.
Assessment of macroeconomic indicators leading into crises, including financial liberalization, credit growth, capital movements, and exchange rate valuation.
Banking crises typically precede balance-of-payments crises, and the subsequent currency collapse exacerbates banking instability to create a reinforcing vicious spiral.
Financial liberalization commonly acts as a precursor to banking distress, with crises emerging as economies transition into recession following sustained credit- and capital-inflow-fueled booms alongside overvalued currencies.

Cite This Study

Kaminsky et al. (1999) studied this question.

synapsesocial.com/papers/69dd4e8399c691022d99c082 https://doi.org/10.1257/aer.89.3.473

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