An analysis of the more and less important determinants of banking crises causing sovereign debt crises. Some careful conclusions can be drawn from the nationalization and guarantee variables. The focus is on the solvency of countries rather than the more often applied output gap. The debt to GDP behaved as in earlier research. History showed that banking crises can lead to extreme deviations in debt to GDP. Significant changes in debt to GDP do not always lead to sovereign debt crises. Bank failures in the USA are significantly related to debt to GDP over time.
Download: SOVEREIGN GUARANTEES, BANK FAILURES AND RECEIVERSHIP: Solution or increasing risk?
Source: Erasmus Thesis
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