Bad banks choking good banks: simulating balance sheet contagion

Artikel

We investigate the propagation of contagion through banks' balance sheets in a two-country model. We simulate an increase in non-performing loans in one bank, and study the effects on other banks and the macro-economy of each country. We show that credit crunches destabilize each economy in the short run and in the long run reduce potential output. We quantify this loss.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: European Journal of Economics and Economic Policies: Intervention (EJEEP) ; ISSN: 2052-7772 ; Volume: 12 ; Year: 2015 ; Issue: 1 ; Pages: 51-72

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications ; Money Supply; Credit; Money Multipliers ; Bankruptcy; Liquidation
• Subject: credit crunch ; contagion ; stock-flow consistent models

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Khalil, Saed
• Event: Veröffentlichung
• (who): Edward Elgar Publishing
• (where): Cheltenham
• (when): 2015

Further information

• DOI: doi:10.4337/ejeep.2015.01.06
• Handle: http://hdl.handle.net/10419/277319
• Last update: 10.03.2025, 11:44 AM CET