https://www.nber.org/system/files/working_papers/w11370/w11370.pdf

What Matters for Financial Development? Capital Controls, Institutions, and Interactions

https://www.bancaditalia.it/pubblicazioni/temi-discussione/1998/1998-0343/tema_343_98.pdf

What Caused the Asian Currency and Financial Crisis

THE EAST ASIAN crisis is only the latest in a series of spectacular economic catastrophes in developing countries. In the past twenty years at least ten countries have suffered from the simultaneous onset of currency crises and banking crises. This has led to full-blown economic crises, in many cases with GDP contractions of 5 to 12 percent in the first year and negative or only slightly positive growth for several years after. Many other countries have experienced contractions of similar magnitude following currency or banking crises. Financial crises are not strictly exogenous; in many cases the slowdown itself, or the very factors that led to it, have helped to cause a financial crisis. But there is no doubt that the standard features of financial crises, including overshooting exchange rates, withdrawal of foreign capital, failure to roll over short-term debts, internal credit crunches, and the process of disintermediation have also been important. Crises are also becoming increasingly frequent, at least relative to the post-World War II period. There has been, in Gerard Caprio's memorable phrase, a "boom in bust[s]."' Caprio and Daniela Klinge-

/pdf/economic-crises-evidence-and-insights-from-east-asia-z2eu3wem37.pdf

Economic Crises: Evidence and Insights from East Asia

Since the Tequila crisis of 1994-95, the Asian flu of 1997, and the Russian virus of 1998, economists have been busy producing research on the subject of contagion. Yet, few studies have examined empirically through which channels the disturbances are transmitted if there are, indeed, fundamental reasons for the spillovers we observe. We attempt to fill this gap by analyzing how both trade links and the largely ignored financial sector links influence the pattern of fundamentals-based contagion. We examine the role of international bank lending, the potential for cross-market hedging, and bilateral and third-party trade in the propagation of crises.

On crises, contagion, and confusion

The recent financial crisis has highlighted the need to go beyond a purely micro approach to financial regulation and supervision. As a consequence, the number of policy speeches, research papers and conferences that discuss a macro perspective on financial regulation has grown considerably. The policy debate is focusing in particular on macroprudential tools and their usage, their relationship with monetary policy, their implementation and their effectiveness. Macroprudential policy has recently also attracted considerable attention among researchers. This paper provides an overview of research on this topic. We also identify important future research questions that emerge from both the literature and the current policy debate.

/pdf/macroprudential-policy-a-literature-review-54icqxy2zp.pdf

Macroprudential policy – a literature review

The authors examine the empirical evidence on currency crises and propose a specific early-warning system. This system involves monitoring the evolution of several indicators that tend to exhibit unusual behavior in the periods preceding a crisis. An indicator exceeding a certain threshold value should be interpreted as a warning"signal"that a currency crisis may take place within the following 24 months. The threshold values are calculated to strike a balance between the risk of having many false signals and the risk of missing many crises. Within this approach, the variables with the best track record include exports, deviations of the real exchange rate from trend, the ratio of broad money to gross international reserves, output, and equity prices. The evidence does not support some of the other indicators that were considered, including imports, bank deposits,the difference between foreign and domestic real deposit interest rates, and the ratio of lending to deposit interest rates.

/pdf/leading-indicators-of-currency-crises-13twwv9h9l.pdf

Leading Indicators of Currency Crises

This paper examines the empirical evidence on currency crises and proposes a specific early warning system. This system involves monitoring the evolution of several indicators that tend to exhibit an unusual behavior in the periods preceding a crisis. When an indicator exceeds a certain threshold value, this is interpreted as a warning "signal" that a currency crisis may take place within the following 24 months. The variables that have the best track record within this approach include exports, deviations of the real exchange rate from trend, the ratio of broad money to gross international reserves, output, and equity prices.

/pdf/leading-indicators-of-currency-crises-uri2v2azuu.pdf

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2882939_code2196598.pdf?abstractid=2882556&mirid=1

Saul Lizondo

Papers

Leading Indicators of Currency Crises

Leading Indicators of Currency Crises

Leading Indicators of Currency Crises