Structural Vulnerabilities and Currency Crises
31 Pages Posted: 30 Jan 2006
Date Written: January 2002
Abstract
This paper examines the role of structural factors - governance and rule of law, corporate sector governance (creditor rights and shareholder rights), corporate financing structure - as well as macroeconomic variables in currency crises. Using a technique known as a binary recursive tree allows for interactions between the various explanatory variables. It is found that structural vulnerabilities play an important role in the occurrence of deep currency crises (those with a real GDP growth decline of at least 3 percentage points) and that there are complex interactions between these structural vulnerabilities and macroeconomic imbalances.
Keywords: Currency crises, structural indicators, corporate governance, binary recursive trees
JEL Classification: F31, F41, F47, G30, C45
Suggested Citation: Suggested Citation
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