Controlling the Fiscal Costs of Banking Crises
In recent decades, a majority of countries have experienced a systemic banking crisis requiring a major-and expensive-overhaul of their banking system. Not only do banking crises hit the budget with outlays that must be absorbed by higher taxes (or...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2000/09/692995/controlling-fiscal-costs-banking-crises http://hdl.handle.net/10986/19787 |
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okr-10986-197872021-04-23T14:03:46Z Controlling the Fiscal Costs of Banking Crises Honohan, Patrick Klingebiel, Daniela ASSET MANAGEMENT ASSET MANAGEMENT COMPANIES BALANCE SHEETS BANK CLOSURES BANK DEPOSITS BANK FAILURE BANK FAILURES BANK INSOLVENCY BANK MANAGEMENT BANK REGULATION BANK STRUCTURE BANKING CRISES BANKING CRISIS BANKING DISTRESS BANKING SYSTEM BANKING SYSTEM DISTRESS BANKING SYSTEMS BANKS BORROWING CAPITAL BASE CENTRAL BANK CENTRAL BANKS CENTRALIZATION CONSOLIDATION CONTAINMENT PHASE CORRUPTION CROSS COUNTRY EXPERIENCE DEPOSIT GUARANTEES DEPOSITORS DEPOSITS DEREGULATION ECONOMETRIC ANALYSIS ECONOMIC GROWTH EXOGENOUS VARIABLES EXPECTED VALUE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL SECTOR FINANCIAL SYSTEM FINANCIAL SYSTEMS FISCAL FISCAL COSTS FISCAL PRESSURES FUNCTIONAL FORMS GAMBLING GDP GNP GOVERNMENT AGENCY GOVERNMENT GUARANTEES GOVERNMENT OWNERSHIP INDUSTRIALIZED COUNTRIES INFLATION INSOLVENT INSOLVENT BANKS INTEREST RATES INVESTMENT BANKING LAWS LIQUIDATION LIQUIDITY LOAN CLASSIFICATION MACRO FACTORS MACROECONOMIC CONDITIONS MACROECONOMIC SHOCKS MARKET VALUE MATURITY VALUE MORAL HAZARD NATIONALIZATION PREDICTIONS PRUDENTIAL REGULATIONS PRUDENTIAL REQUIREMENTS PUBLIC DEBT PUBLIC DEBT RELIEF REAL INTEREST RATE REAL SECTOR RECAPITALIZATION RECESSION REGULATORY FORBEARANCE REGULATORY POLICIES REGULATORY POLICY REGULATORY REGIME REHABILITATION RISK SHARING SAVINGS SECURITIES SECURITIES TRADING SHAREHOLDERS STABILIZATION SYSTEMIC BANKING CRISES TAXATION TOTAL COSTS TRADING In recent decades, a majority of countries have experienced a systemic banking crisis requiring a major-and expensive-overhaul of their banking system. Not only do banking crises hit the budget with outlays that must be absorbed by higher taxes (or spending cuts), but they are costly in terms of forgone economic output. Many different policy recommendations have been made for limiting the cost of crises, but there has been little systematic effort to see which recommendations work in practice. The authors try to quantify the extent to which fiscal outlays incurred in resolving banking distress can be attributed to crisis management measures of a particular kind adopted by the government in the early years of the crisis. They find evidence that certain crisis management strategies appear to add greatly to fiscal costs: unlimited deposit guarantees, open-ended liquidity support, repeated recapitalization, debtor bail-outs, and regulatory forbearance. Their findings clearly tilt the balance in favor of a strict rather than an accommodating approach to crisis resolution. At the very least, regulatory authorities who choose an accommodating or gradualist approach to an emerging crisis must be sure they have some other way to control risk-taking. 2014-08-27T20:44:14Z 2014-08-27T20:44:14Z 2000-09 http://documents.worldbank.org/curated/en/2000/09/692995/controlling-fiscal-costs-banking-crises http://hdl.handle.net/10986/19787 English en_US Policy Research Working Paper;No. 2441 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ASSET MANAGEMENT ASSET MANAGEMENT COMPANIES BALANCE SHEETS BANK CLOSURES BANK DEPOSITS BANK FAILURE BANK FAILURES BANK INSOLVENCY BANK MANAGEMENT BANK REGULATION BANK STRUCTURE BANKING CRISES BANKING CRISIS BANKING DISTRESS BANKING SYSTEM BANKING SYSTEM DISTRESS BANKING SYSTEMS BANKS BORROWING CAPITAL BASE CENTRAL BANK CENTRAL BANKS CENTRALIZATION CONSOLIDATION CONTAINMENT PHASE CORRUPTION CROSS COUNTRY EXPERIENCE DEPOSIT GUARANTEES DEPOSITORS DEPOSITS DEREGULATION ECONOMETRIC ANALYSIS ECONOMIC GROWTH EXOGENOUS VARIABLES EXPECTED VALUE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL SECTOR FINANCIAL SYSTEM FINANCIAL SYSTEMS FISCAL FISCAL COSTS FISCAL PRESSURES FUNCTIONAL FORMS GAMBLING GDP GNP GOVERNMENT AGENCY GOVERNMENT GUARANTEES GOVERNMENT OWNERSHIP INDUSTRIALIZED COUNTRIES INFLATION INSOLVENT INSOLVENT BANKS INTEREST RATES INVESTMENT BANKING LAWS LIQUIDATION LIQUIDITY LOAN CLASSIFICATION MACRO FACTORS MACROECONOMIC CONDITIONS MACROECONOMIC SHOCKS MARKET VALUE MATURITY VALUE MORAL HAZARD NATIONALIZATION PREDICTIONS PRUDENTIAL REGULATIONS PRUDENTIAL REQUIREMENTS PUBLIC DEBT PUBLIC DEBT RELIEF REAL INTEREST RATE REAL SECTOR RECAPITALIZATION RECESSION REGULATORY FORBEARANCE REGULATORY POLICIES REGULATORY POLICY REGULATORY REGIME REHABILITATION RISK SHARING SAVINGS SECURITIES SECURITIES TRADING SHAREHOLDERS STABILIZATION SYSTEMIC BANKING CRISES TAXATION TOTAL COSTS TRADING |
| spellingShingle |
ASSET MANAGEMENT ASSET MANAGEMENT COMPANIES BALANCE SHEETS BANK CLOSURES BANK DEPOSITS BANK FAILURE BANK FAILURES BANK INSOLVENCY BANK MANAGEMENT BANK REGULATION BANK STRUCTURE BANKING CRISES BANKING CRISIS BANKING DISTRESS BANKING SYSTEM BANKING SYSTEM DISTRESS BANKING SYSTEMS BANKS BORROWING CAPITAL BASE CENTRAL BANK CENTRAL BANKS CENTRALIZATION CONSOLIDATION CONTAINMENT PHASE CORRUPTION CROSS COUNTRY EXPERIENCE DEPOSIT GUARANTEES DEPOSITORS DEPOSITS DEREGULATION ECONOMETRIC ANALYSIS ECONOMIC GROWTH EXOGENOUS VARIABLES EXPECTED VALUE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL SECTOR FINANCIAL SYSTEM FINANCIAL SYSTEMS FISCAL FISCAL COSTS FISCAL PRESSURES FUNCTIONAL FORMS GAMBLING GDP GNP GOVERNMENT AGENCY GOVERNMENT GUARANTEES GOVERNMENT OWNERSHIP INDUSTRIALIZED COUNTRIES INFLATION INSOLVENT INSOLVENT BANKS INTEREST RATES INVESTMENT BANKING LAWS LIQUIDATION LIQUIDITY LOAN CLASSIFICATION MACRO FACTORS MACROECONOMIC CONDITIONS MACROECONOMIC SHOCKS MARKET VALUE MATURITY VALUE MORAL HAZARD NATIONALIZATION PREDICTIONS PRUDENTIAL REGULATIONS PRUDENTIAL REQUIREMENTS PUBLIC DEBT PUBLIC DEBT RELIEF REAL INTEREST RATE REAL SECTOR RECAPITALIZATION RECESSION REGULATORY FORBEARANCE REGULATORY POLICIES REGULATORY POLICY REGULATORY REGIME REHABILITATION RISK SHARING SAVINGS SECURITIES SECURITIES TRADING SHAREHOLDERS STABILIZATION SYSTEMIC BANKING CRISES TAXATION TOTAL COSTS TRADING Honohan, Patrick Klingebiel, Daniela Controlling the Fiscal Costs of Banking Crises |
| relation |
Policy Research Working Paper;No. 2441 |
| description |
In recent decades, a majority of
countries have experienced a systemic banking crisis
requiring a major-and expensive-overhaul of their banking
system. Not only do banking crises hit the budget with
outlays that must be absorbed by higher taxes (or spending
cuts), but they are costly in terms of forgone economic
output. Many different policy recommendations have been made
for limiting the cost of crises, but there has been little
systematic effort to see which recommendations work in
practice. The authors try to quantify the extent to which
fiscal outlays incurred in resolving banking distress can be
attributed to crisis management measures of a particular
kind adopted by the government in the early years of the
crisis. They find evidence that certain crisis management
strategies appear to add greatly to fiscal costs: unlimited
deposit guarantees, open-ended liquidity support, repeated
recapitalization, debtor bail-outs, and regulatory
forbearance. Their findings clearly tilt the balance in
favor of a strict rather than an accommodating approach to
crisis resolution. At the very least, regulatory authorities
who choose an accommodating or gradualist approach to an
emerging crisis must be sure they have some other way to
control risk-taking. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Honohan, Patrick Klingebiel, Daniela |
| author_facet |
Honohan, Patrick Klingebiel, Daniela |
| author_sort |
Honohan, Patrick |
| title |
Controlling the Fiscal Costs of Banking Crises |
| title_short |
Controlling the Fiscal Costs of Banking Crises |
| title_full |
Controlling the Fiscal Costs of Banking Crises |
| title_fullStr |
Controlling the Fiscal Costs of Banking Crises |
| title_full_unstemmed |
Controlling the Fiscal Costs of Banking Crises |
| title_sort |
controlling the fiscal costs of banking crises |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2000/09/692995/controlling-fiscal-costs-banking-crises http://hdl.handle.net/10986/19787 |
| _version_ |
1764441411476783104 |