This paper studies whether compliance with the Basel Core Principles for Effective Banking Supervision (BCP) improves bank soundness. BCP compliance assessments provide a unique source of information about the quality of bank supervision and regulation around the world. The authors find a...

Explicit deposit insurance tends to be detrimental to bank stability - the more so where bank interest rates are deregulated and the institutional environment is weak.Based on evidence for 61 countries in 1980-97, Demirguc-Kunt and Detragiache find that explicit deposit insurance tends to be...

A multivariate logit empirical model of banking crisis probabilities can be useful for monitoring fragility in the banking sector.Demirguuml;ccedil;-Kunt and Detragiache explore how a multivariate logit empirical model of banking crisis probabilities can be used to monitor fragility in the...

Vulnerability to crises in the banking sector appears to be associated with these factors: a weak macroeconomic environment characterized by slow GDP growth and high inflation, vulnerability to sudden capital outflows, low liquidity in the banking sector, a high share of credit to the private...

Contemporary banking crises are not accompanied by declines in aggregate bank deposits, and credit does not fall relative to output, but the growth of both deposits and credit does slow down substantially. Output recovery begins the second year after the crisis and is not led by a resumption of...

This paper studies whether compliance with the Basel Core Principles for Effective Banking Supervision (BCPs) improves bank soundness. The authors find a significant and positive relationship between bank soundness (measured with Moody's financial strength ratings) and compliance with principles...

A rapidly growing empirical literature is studying the causes and consequences of bank fragility in present-day economies. The paper reviews the two basic methodologies adopted in cross-country empirical studies the signals approach and the multivariate probability model and their application to...

The paper studies the factors associated with the emergence of systemic banking crises in a large sample of developed and developing countries in 1980-94, using a multivariate logit econometric model. The results suggest that crises tend to erupt when the macroeconomic environment is weak,...

A study of 53 countries during 1980-95 finds that financial liberalization increases the probability of a banking crisis, but less so where the institutional environment is strong. In particular, respect for the rule of law, a low level of corruption, and good contract enforcement are relevant...

This paper explores how a multivariate logit empirical model of banking crisis probabilities can be used to monitor banking sector fragility. The proposed approach relies on readily available data, and the fragility assessment has a clear interpretation based on in-sample statistics. The model...