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- W1787275682 abstract "This paper considers the joint role of macro-economic and bank specific factors in explaining the occurrence of banking problems in the twenty-one Central and East European emerging markets over the recent decade. Using data at the individual bank level we show, using a logit model, that the macroeconomic factors play a central role in determining banking sector instability in the early stages of difficulty, while the bank-specific factors are more important in the later stages and gain more weight as the banking sector develops and the institutional framework becomes mature. Most of the Central and Eastern European countries (CEECs) have experienced severe banking crises over the 1990s. These economies have been vulnerable to external shocks coupled with financial liberalisation and economic restructuring. The purpose of our research is to establish whether these crises are primarily a function of the unique difficulties of transition or whether they reflect similar factors to those recorded in the lead up to financial crises elsewhere round the globe. Most of the existing research on the factors that help explain the occurrence of these problems deals with Asian or South American banking crises. Moreover, some extensive crosscountry studies, Hardy and Pazarbasioglu (1998), for example, deliberately refrain from including Central and Eastern European transition countries because they feel that these former socialist transition economies, suffered a special range of problems that make them noncomparable with most of the other countries. It is normally argued that the CEECs have faced twin problems. They have started from state banks dominated by directed lending. Such banks have had to switch to a risk based approach and acquire the expertise necessary to run such a system successfully in a competitive environment. Many such banks were technically insolvent on market-based criteria, i.e. without unlimited state support, and hence needed to be recapitalised. At the same time the ∗ The views expressed here are those of the authors and may not coincide with any held by Eesti Pank or Suomen" @default.
- W1787275682 created "2016-06-24" @default.
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- W1787275682 date "2006-11-28" @default.
- W1787275682 modified "2023-10-11" @default.
- W1787275682 title "Investigating the Early Signals of Banking Sector Vulnerabilities in Central and East European Emerging Markets" @default.
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- W1787275682 doi "https://doi.org/10.4337/9781847203038.00032" @default.
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