| Banking crises have surfaced with increasing frequency as a major source of financial instability. Also, banking crises are often very costly, both to the governments that bail out the system and in terms of forgone output. This dissertation uses information on episodes of banking sector distress from a large number of countries to examine three broad lines of inquiry.;The first chapter probes the characteristics, both institutional and economic, that raise the probability of experiencing a banking crisis, with a special emphasis on the circumstances surrounding the banking crisis in Japan. This chapter adds to the recently growing literature of predicting banking crises empirically.;The second chapter examines the issues underlying slow banking crisis resolution. In particular, this chapter proposes a theoretical political economy model of the speed of resolving a banking crisis and then uses empirical models of duration to analyze the political, institutional and economic characteristics that affect the speed of resolution of a banking crisis.;History has demonstrated that output loss associated with banking crises has varied widely across countries. The third chapter explores the differences among various countries' experiences with banking crises, by trying to measure the output loss associated with a banking crisis, and to examine the policy responses and institutional characteristics that ameliorate the negative effects of banking distress. |
