Title

The Impact of Conflict and Political Instability on Banking Crises in Developing Countries

Date of Publication

1-1-2020 12:00 AM

Publication Date

February 28, 2020

Security Theme

Political Stability

Keywords

srhreports, politicalstability, conflict, political instability, banking crises, fiscal crises

Description

This paper investigates whether rising conflict and political instability globally over the past several decades led to increased occurrence of banking crises in developing countries. The paper provides strong evidence that conflicts and political instability are indeed associated with higher probability of systemic banking crises. Interestingly, the paper also finds that conflicts and political instability in one country can have negative spillover effects on neighboring countries’ banking systems. The paper provides evidence that the primary channel of transmission is the occurrence of fiscal crises following a conflict or political instability.

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Jan 1st, 12:00 AM

The Impact of Conflict and Political Instability on Banking Crises in Developing Countries

This paper investigates whether rising conflict and political instability globally over the past several decades led to increased occurrence of banking crises in developing countries. The paper provides strong evidence that conflicts and political instability are indeed associated with higher probability of systemic banking crises. Interestingly, the paper also finds that conflicts and political instability in one country can have negative spillover effects on neighboring countries’ banking systems. The paper provides evidence that the primary channel of transmission is the occurrence of fiscal crises following a conflict or political instability.