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Book Chapter: Financial institutions, financial contagion, and financial crises

TitleFinancial institutions, financial contagion, and financial crises
Authors
KeywordsFinancial institutions
Financial contagion
Financial crises
Interbank market
Issue Date2000
PublisherInternational Monetary Fund
Citation
Financial institutions, financial contagion, and financial crises. In IMF Working Paper, p. 3-32. USA: International Monetary Fund, 2000 How to Cite?
AbstractIn this paper financial contagion and crises are endogenized through the interactions among corporations, banks and the interbank market. We show that the lack of financial disciplines in a single-bank-financing economy generates informational problems and thus the malfunction of the interbank market, which constitutes a mechanism of financial contagion and may lead to a financial crisis. In contrast, financial disciplines in an economy with diversified financial institutions lead to timely information disclosure from firms to banks and improve the informational environment of the interbank market. With symmetric information in the interbank market, bank runs are contained to insolvent banks and financial crises are prevented. Our theory sheds light to the causes and timing of the East Asian crisis, it also has important policy implications on lender of last resort and banking reform.
Persistent Identifierhttp://hdl.handle.net/10722/153481
SSRN

 

DC FieldValueLanguage
dc.contributor.authorHuang, H-
dc.contributor.authorXu, C-
dc.date.accessioned2012-08-06T07:06:06Z-
dc.date.available2012-08-06T07:06:06Z-
dc.date.issued2000-
dc.identifier.citationFinancial institutions, financial contagion, and financial crises. In IMF Working Paper, p. 3-32. USA: International Monetary Fund, 2000-
dc.identifier.urihttp://hdl.handle.net/10722/153481-
dc.description.abstractIn this paper financial contagion and crises are endogenized through the interactions among corporations, banks and the interbank market. We show that the lack of financial disciplines in a single-bank-financing economy generates informational problems and thus the malfunction of the interbank market, which constitutes a mechanism of financial contagion and may lead to a financial crisis. In contrast, financial disciplines in an economy with diversified financial institutions lead to timely information disclosure from firms to banks and improve the informational environment of the interbank market. With symmetric information in the interbank market, bank runs are contained to insolvent banks and financial crises are prevented. Our theory sheds light to the causes and timing of the East Asian crisis, it also has important policy implications on lender of last resort and banking reform.-
dc.languageeng-
dc.publisherInternational Monetary Fund-
dc.relation.ispartofIMF Working Paper-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subjectFinancial institutions-
dc.subjectFinancial contagion-
dc.subjectFinancial crises-
dc.subjectInterbank market-
dc.titleFinancial institutions, financial contagion, and financial crisesen_US
dc.typeBook_Chapteren_US
dc.identifier.emailXu, C: cgxu@hku.hk-
dc.description.naturepostprint-
dc.identifier.spage3-
dc.identifier.epage32-
dc.publisher.placeUSA-
dc.identifier.ssrn879637-

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