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Full-Text Articles in Business
How Good Is The Market At Assessing Bank Fragility? A Horse Race Between Different Indicators, Paola Bongini, Luc Laeven, Giovanni Majononi
How Good Is The Market At Assessing Bank Fragility? A Horse Race Between Different Indicators, Paola Bongini, Luc Laeven, Giovanni Majononi
Paola Bongini
For a sample of individual banks, active in the East Asian countries during the years 1995-1998, we explore the performance of three sets of indicators of bank fragility computed on the basis of publicly available information. We compare the behavior of traditional “early warning” indicators, based on balance sheet information, with that of implicit deposit insurance premia, based on the stock prices dynamics, and with the behavior of credit rating agencies’ assessments. We find significantly different patterns among the three groups of indicators in their ability of forecasting financial distress at both a specific point in time and through time. …
The Political Economy Of Distress In East Asian Financial Institutions, Paola Bongini, Stijn Claessens, Giovanni Ferri
The Political Economy Of Distress In East Asian Financial Institutions, Paola Bongini, Stijn Claessens, Giovanni Ferri
Paola Bongini
The 1997±1999 East Asian crisis is an interesting case for studying the determinants of distress and closure of ®nancial institutions. Of a sample of 283 ®nancial institutions from Indonesia, Korea, Malaysia, the Philippines, and Thailand, 120 experienced distress, and by July 1999, 38 were closed. We ®nd that traditional, CAMEL-type ®nancial data for 1996 help predict distress and closure. ``Connections''Ðwith industrial groups or in¯uential familiesÐincreased the likelihood of distress, however, suggesting that supervisors had granted selective prior forbearance from prudential regulations. Since closure was more, not less, likely with connections, the closure processes themselves appear transparent. We also ®nd evidence …