Booms to Busts: A Case Study of Banking Crisis in Emerging Markets

Booms to Busts: A Case Study of Banking Crisis in Emerging Markets

Banking Crises in Emerging Markets

Economics

Harshini Tadepalli

2025

Harshini Tadepalli

This paper finds that banking crisis frequently begin to develop in moments where an economy is strong, rather than just from periods of weakness. It uses data from 21 emerging markets (1970-2024) from international economic and institutional data sources, then applying a random-effects logit model to find that although strong socioeconomic conditions help contain crisis risk, credit growth, inflation and external imbalances significantly increase risk. As institutions respond to this increase in risk, analysis showed that a government’s stability is less protective, instead results have shown stability to frequently increase preceding a crisis.

emerging markets, banking crises, financial crisies, developing countries, economic stabilty, political stability, institutional stability