engleski

Microeconomic roots of banking crisis-lessons from Croatia

Banking crises are a constant in economic history. Much is written about crises, their economic and political effects, correlation between banking and financial crises and their main causes. Work on banking crises has focused on a broad set of indicators, like poor macroeconomic operating environment, inadequate policies, slowdown in growth or exports, fiscal deficits, public debt or so on. By the 1980s, the potential causes of crises can be found on macroeconomic level. Weak internal supervisory frameworks, concentrated lending, incompetent management, or excessive risk can create substantial losses. Banks failures would reduce deposits, reduce source of credits, and produce systematic risk. Experiences in many countries /and Croatia) demonstrated the high cost of bank crises. Managing banking crises is one of the difficult tasks and there is no single solution to them. The efficient management of crises (under imperfect information) must quickly solve the problems of moral hazard, profoundness of crisis and distribution of fiscal burden. The option between market intervention and “ systematic watcher” depends on circumstance and development of banking crisis.

Bank crises ; costs of crises ; macro and microeconomic roots of banking crises ; bank failure models

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