The Late 1990s Financial Crisis in Ecuador: Institutional Weaknesses, Fiscal Rigidities, and Financial Dollarization at Work
By L. Jácome. Social Science Research Network, 2004
116 citations recorded by the source corpus.
This paper stresses three factors that amplified the 1990s financial crisis in Ecuador, namely institutional weaknesses, rigidities in public finances, and high financial dollarization. Institutional factors restricted the government`s ability to respond in a timely manner and efficiently enough to prevent the escalation of the banking crisis and spurred the adoption of suboptimal policy decisions. Public finance rigidities limited the government`s capacity to correct existing imbalances and the deteriorating fiscal stance associated with the costs of the financial crisis. Financial dollarization increasingly reduced the effectiveness of financial safety nets, fostered foreign currency demand, and accelerated a currency crisis, thereby further worsening the solvency of banks. These three factors reinforced each other, exacerbating costs as the economy went through a triple banking, currency, and fiscal crisis.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/39419917702ff6d9e62c5bd9c112009aa2aaea26
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In Economics and Econometrics
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Citations in the corpus
- Systemic Banking Crises: A New Database (2008, background): “Moreover, bank runs resumed as soon as the unfreezing began (Jacome, 2004).”
- The Use of Blanket Guarantees in Banking Crises (2008, background): “…factors influencing the final outcome include institutional impediments, such as the case of Ecuador, where legal impediments did not permit the implementation of purchase and assumption operations and therefore cash payments had to be used to honor the guarantee (IMF, 2000, and Jácome, 2004).”