Financial sector reform in the Baltic countries is reviewed in light of the banking crises that emerged during the reform period. It is argued that the crises had their roots in the structural deficiencies specific to planned economies and the financial environment that developed before and after these countries regained their independence, thus rendering them largely inevitable. Because of the low level of financial intermediation, however, even the failure of large banks had limited systemic effects and a minor negative impact on output and incomes. The crises slowed down the financial reform process, but brought about a desired consolidation of the banking sector.

The experiences of seven countries that have undergone banking crises show that crises have significant implications for the short-run stability of the demand for money, the money multiplier, the transmission mechanism, and the signal variables of monetary policy. Monetary and credit instability, coupled with changes in the nature of the monetary and credit aggregates, complicate monetary management. These findings may require redesigning monetary instruments in favor of faster-reacting instruments, such as open market operations, and introducing additional indicators of the monetary stance, such as asset price and exchange rate movements. More frequent reviews of monetary programs may also be necessary.

In Systemic and Borderline Banking Crises, a well-respected doctor of economic sciences shares his comprehensive analysis of the genesis and growth of the systemic banking crisis in many countries, providing a useful resource for students, lecturers, and bankers who wish to broaden their study of economics. Irakli Kovzanadze is an economics professor who possesses more than twenty years of professional experience in the banking institutions of Georgia, other post-Soviet countries, and Europe. While presenting a summary of both the theoretical and practical approaches, addressing the causes and progression, and providing ways to forecast and prevent future banking crises, Dr. Kovzanadze delves into a series of related topics including: Types and forms of manifestation Role of monetary and credit policies in averting and overcoming a crisis Systemic banking crises in other countries and transitional economies Function of regulations and how they can create a sustainable banking system Principles of establishing a deposit insurance system in Georgia This study relies on research material reflective of the experiences of different countries and regions of the world to provide not only an in-depth look at Georgias current banking challenges, but also the ways to prevent a future crisis.

This volume provides two recent analyses of government responses to financial crises; they have been developed in the light of the recent East Asian crisis, but also draw on experiences from other regions. Issues discussed relate to: the tradeoffs involved in public policies for systemic financial and corporate sector restructuring; and the use of cross-country evidence to determine whether specific crisis containment and resolution policies effect the fiscal costs of resolving a crisis. The book also presents information on 113 systemic banking crises that have occurred in 93 countries since the 1970s, as well as 50 borderline or non-systemic banking crises in 44 countries during the same period.

This timely reader of seminal papers published by Palgrave on behalf of Comparative Economic Studies, examines how and why foreign banks enter emerging markets and the positive benefits they bring to the host countries.

To complement the early warning signals literature, we study the determinants of banking and currency crises for small states and currency boards. Building on the crisis dataset by Laeven and Valencia (2020), we estimate a binominal logit model to identify the determinants of crises, and as a case study, we apply our models to the Eastern Caribbean Currency Union (ECCU). Our findings largely confirm past studies’ results that both external and domestic fundamentals matter in predicting crisis likelihood, but we find that small states and fixed exchange rate regimes are more sensitive to these fundamentals, compared to larger economies. Our empirical results also suggest that for currency board economies, keeping a high level of the foreign reserve cover—the “backing ratio” defined as official foreign reserves as a share of central bank demand liabilities—is critical to reduce the likelihood of both banking and currency crises. The backing ratio is particularly important during years of global economic downturn.

Transition countries have become one of the most dynamic segments of the global economy in recent years. With economic growth rates at considerably higher percentages than those of the world economy, these countries are a strong and vital element of global stability. Professor Irakli Kovzanadze, a doctor of economic sciences, provides a comprehensive analysis of the socioeconomic factors of development in transition countries with regard to history and geopolitics. He specifically analyzes the stages, legalities, and particulars of economic and banking system progress and considers the impact of financial globalization on these countries during a transition-to-market economy. Kovzanadze's study delves into the progress and problems relating to integration of Central and Eastern European countries into the European Union and includes detailed scrutiny of the trends and prospects of economic and banking system development in Central and Eastern Europe, the Baltic region, and former Soviet Union countries with particular emphasis on economic growth in Georgia. Kovzanadze's careful examination of the dramatic events that have occurred in transition countries during the last few years will promote further discussion within the banking, macroeconomics, and geopolitical communities on the innovative ways to reform an economy in countries in the midst of change.

How 12 transition economies dealt with banking crises.

The 21st century witnessed major changes in the financial environment surrounding bank regulators and banks. Banking and Monetary Policies in a Changing Financial Environment delves into three of these developments and challenges. The first change in the financial environment relates to the rise in the number and sophistication of financial and economic crimes which shaped the international regulatory architecture. New rules and regulations led to the creation of new strategies to combat these crimes, especially those concerning the spread of more advanced money laundering methods and techniques, terrorist financing after the 9/11 attacks, and the proliferation of weapons of mass destruction. The second development concerns the global financial crisis of 2008 which drastically affected the regulatory environment of various international and domestic financial authorities causing major changes in bank lending and corporate governance policies, and in the development of the Basel III accord on capital adequacy for bank supervision. The third development manifests itself in the creation of a major European monetary union without a fiscal union and a giant European central bank impacting the conduct of monetary policy. This book combines theory, policy, regulation and institutional approaches with empirical testing, analyzing applications and case studies of various international regulatory authorities and administrations, countries and jurisdictions, central banks and commercial banks. This volume is suitable for those who study international finance, Banking and white collar crime.