Intertwined Sovereign and Bank Solvencies in A Model of Self-fulfilling CrisiseBook - 2012
Large fiscal financing needs, both in advanced and emerging market economies, have often been met by borrowing heavily from domestic banks. As public debt approached sustainability limits in a number of countries, however, high bank exposure to sovereign risk created a fragile inter-dependence between fiscal and bank solvency. This paper presents a simple model of twin (sovereign and banking) crisis that stresses how this interdependence creates conditions conducive to a self-fulfilling crisis.
Publisher: [Washington, D.C.] : International Monetary Fund, Ă2012
Characteristics: 1 online resource (29 pages) data file,rda