Effects of Political and Economic Instabilities on Banking Crises in Developing Countries مقاله

Аннотация:

The economic performance and political structure of societies have a close and reciprocal relationship, and the success and durability of each political structure depend on its economic performance. In this way, economic stability overlaps with political stability, and any disruption in it affects the banking system. In this article, using theoretical literature and previous studies, the role of political and economic instability on the occurrence of banking crises is explained. The results show that over the past years, the conventional banking system has faced numerous financial crises that have disrupted financial stability and sometimes the stability of the entire economic system. It is clear that banking crises are not specific to developed or developing countries; however, the economic structure of developing countries is somehow affected by the economy and politics of developed countries and therefore they are more vulnerable. In general, it can be inferred that banking in developing countries in the Middle East and North Africa regions reacts more to political and economic instabilities. Factors such as terrorism, cabinet changes, government crises, demonstrations, guerrilla warfare, number of elections, revolution, and strikes act as dimensions of political instability that cause banking crises in developing countries. In the dimension of economic instability, variables such as unexpected increases in interest rates, disordered bank balance status, exchange rate fluctuations, and bank structures also affect the intensification of banking crises.