Twin crises and the intermediary role of
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Claudia M. Buch; Ralph P. Heinrich
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Article
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1999
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John Wiley and Sons
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English
⚖ 151 KB
Banking and balance of payments crises often happen simultaneously. We show that the impact of a devaluation on the net worth of commercial banks with a short open foreign exchange position speeds up the timing of a balance of payments crisis. In an asymmetric information framework, domestic commerc