Early Warning Systems for banking crises: political and economic stability

Tamadonejad, Alireza and Mariani Abdul-Majid, and Aisyah Abdul-Rahman, and Mansor Jusoh, and Razieh Tabandeh, (2016) Early Warning Systems for banking crises: political and economic stability. Jurnal Ekonomi Malaysia, 50 (2). pp. 31-38. ISSN 0127-1962


Official URL: http://www.ukm.my/fep/jem/content/2016-2.html


Early Warning System (EWS) is a system that tries to predict the probability of crises using environmental factors. This study seeks to develop an EWS for the probability of systemic banking crises in East Asian countries by using a logit model taking into account a wide range of political and economic factors. Results reveal that short-term debt and exchange rate depreciation may trigger speculative attacks during political instability, economic slowdown, and inefficient regulatory environments. Policymakers and regulators may be able to prevent crises by stabilizing political and economic conditions. Furthermore, results indicate that government instability, corruption, high short-term debt, unstable monetary and fiscal policies do not only reduce investors’ confidence but also prevent effective crisis prevention strategies. Therefore, by adopting the EWS the government would be able to monitor environmental changes causing crises.

Item Type:Article
Keywords:Early Warning System (EWS); Political stability; Systemic banking crises; East Asia
Journal:Jurnal Ekonomi Malaysia
ID Code:10777
Deposited By: ms aida -
Deposited On:04 Oct 2017 01:43
Last Modified:10 Oct 2017 09:37

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