Currency crises and institutions

This study furthers recent literature on currency crises and institutions. The main objective is to re-evaluate the causes of currency crises by focusing on the role played by a broader array of institutional factors and crisis episodes than have previously been considered while at the same time con...

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Main Authors: Shimpalee P.L., Breuer J.B.
Format: Article
Language:English
Published: 2014
Online Access:http://www.scopus.com/inward/record.url?eid=2-s2.0-30944434706&partnerID=40&md5=32f4076d808ce8fdb06acb6f2759e965
http://cmuir.cmu.ac.th/handle/6653943832/1202
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Institution: Chiang Mai University
Language: English
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spelling th-cmuir.6653943832-12022014-08-29T09:20:18Z Currency crises and institutions Shimpalee P.L. Breuer J.B. This study furthers recent literature on currency crises and institutions. The main objective is to re-evaluate the causes of currency crises by focusing on the role played by a broader array of institutional factors and crisis episodes than have previously been considered while at the same time controlling for economic factors. Our dataset consists of over 30 countries covering 13 institutional factors for the period 1984-2002. Two questions are addressed. They are (1) what mix of institutions may contribute to or set the stage for a currency crisis? and (2) what mix of institutions may affect the depth of currency crises as measured by a decline in output? Our findings reveal that institutional as well as economic factors affect the probability of currency crises and that worse institutions are associated with bigger contractions in output during the crisis. In general, our strongest results regarding institutions show that corruption, a de facto fixed exchange rate regime, weak government stability, and weak law and order increase the probability of a currency crisis. We find mixed evidence that deposit insurance, the removal of capital controls, a lack of central bank independence, financial liberalization, and civil law increase the chance of crisis. We find a similar set of factors worsens the contraction in output during a crisis except for deposit insurance, which we find moderates the contraction in output. ? 2005 Elsevier Ltd. All rights reserved. 2014-08-29T09:20:18Z 2014-08-29T09:20:18Z 2006 Article 2615606 10.1016/j.jimonfin.2005.10.008 http://www.scopus.com/inward/record.url?eid=2-s2.0-30944434706&partnerID=40&md5=32f4076d808ce8fdb06acb6f2759e965 http://cmuir.cmu.ac.th/handle/6653943832/1202 English
institution Chiang Mai University
building Chiang Mai University Library
country Thailand
collection CMU Intellectual Repository
language English
description This study furthers recent literature on currency crises and institutions. The main objective is to re-evaluate the causes of currency crises by focusing on the role played by a broader array of institutional factors and crisis episodes than have previously been considered while at the same time controlling for economic factors. Our dataset consists of over 30 countries covering 13 institutional factors for the period 1984-2002. Two questions are addressed. They are (1) what mix of institutions may contribute to or set the stage for a currency crisis? and (2) what mix of institutions may affect the depth of currency crises as measured by a decline in output? Our findings reveal that institutional as well as economic factors affect the probability of currency crises and that worse institutions are associated with bigger contractions in output during the crisis. In general, our strongest results regarding institutions show that corruption, a de facto fixed exchange rate regime, weak government stability, and weak law and order increase the probability of a currency crisis. We find mixed evidence that deposit insurance, the removal of capital controls, a lack of central bank independence, financial liberalization, and civil law increase the chance of crisis. We find a similar set of factors worsens the contraction in output during a crisis except for deposit insurance, which we find moderates the contraction in output. ? 2005 Elsevier Ltd. All rights reserved.
format Article
author Shimpalee P.L.
Breuer J.B.
spellingShingle Shimpalee P.L.
Breuer J.B.
Currency crises and institutions
author_facet Shimpalee P.L.
Breuer J.B.
author_sort Shimpalee P.L.
title Currency crises and institutions
title_short Currency crises and institutions
title_full Currency crises and institutions
title_fullStr Currency crises and institutions
title_full_unstemmed Currency crises and institutions
title_sort currency crises and institutions
publishDate 2014
url http://www.scopus.com/inward/record.url?eid=2-s2.0-30944434706&partnerID=40&md5=32f4076d808ce8fdb06acb6f2759e965
http://cmuir.cmu.ac.th/handle/6653943832/1202
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