Title: Origins of banking crises revisited: evidence from developed and developing countries

Authors: Wafa Ghardallou

Addresses: Accounting Department, College of Business Administration, Princess Nourah bint Abdulrahman University, Saudi Arabia

Abstract: This paper revisits the causes of the 2008 global financial crisis. It focuses on the causes of the crisis, ignoring cross-country contagion effects. The study uses an assortment of financial, regulatory and macroeconomic variables to estimate a logit econometric model for a large sample of developed and developing countries. Findings indicate that lower bank liquidity, higher inflation rates, greater credits to the private sector are all correlated with an increased risk of banking sector problems. In addition, results stress the role of microeconomic variables in explaining the 2008 banking and financial crisis. Surprisingly, results prove that good regulatory practices are likely to enhance the probability of banking crisis, which contradicts the theory prediction. This positive finding makes us skeptical about the role of regulation in promoting banks' stability during the 2008 financial crisis.

Keywords: banking crisis; subprime crisis; macroeconomic environment; microeconomic factors; regulatory framework.

DOI: 10.1504/IJBSR.2021.117269

International Journal of Business and Systems Research, 2021 Vol.15 No.5, pp.581 - 600

Received: 26 Sep 2019
Accepted: 22 Dec 2019

Published online: 05 Jul 2021 *

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