Levine, Ross, Lin, Chen, Xie, Wensi, (2015), “Spare tire? Stock markets, banking crises, and economic recoveries”, Voxeu, 29 July
Some have argued that the stock market serves as a ‘spare tire’ during banking crises by providing an alternative corporate financing channel. This column examines the claim using data for 36 countries spanning 20 years. The findings support the three core predictions of the spare tire view, suggesting that countries can insulate parts of their economy from future banking crises by designing appropriate legal frameworks.
Relevant Posts
- Amaglobeli, David, End, Nicolas, Jarmuzek, Mariusz, Palomba, Geremia, (2015), “From Systemic Banking Crises to Fiscal Costs: Risk Factors”, IMF Working Paper/WP/15/166, Fiscal Affairs Department, July
- Olivier Gourinchas, Pierre, Obstfeld, Maurice, (2015), “Understanding past and future financial crises”, Voxeu, 21 July