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| Author: | Hutchison, M.M. |
| Title: | European banking distress and EMU: Institutional and macroeconomic risks |
| Journal: | Scandinavian Journal of Economics
2002 : SEP, VOL. 104:3, p. 365-389 |
| Index terms: | Industries Banking Regulations Finance Risk European Monetary System Theories Models |
| Freeterms: | EMU EMS |
| Language: | eng |
| Abstract: | Financial stability in Europe has received renewed attention with the advent of EMU. This paper examines whether European Union (EU) country banking systems are particularly vulnerable to systemic risk. It explores episodes of banking sector distress for a large sample of countries, highlighting the experience of the EU. Multivariate probit models are estimated linking the likelihood of banking problems to set of macroeconomic variables and institutional characteristics such as aspects of bank supervision and regulation, restrictions on bank portfolios, and development of the banking system. Given these characteristics, the model predicts a low probability of banking sector distress in EMU countries. |
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