Banking Crisis

Bank crises occur when one or more banks in the financial system of a country, arrive at a level of financial stress, where the regulator and supervisor (in the case of Venezuela, the SUDEBAN) chooses to speak it, and in some cases closed it. They are divided into two groups, individual crises and systemic crises. Individual crises occur when the banks with financial stress pose no danger to the rest of the financial system, almost always because they are banks that do not have large size within the Bank ranking. In this case we have the example of Bank Capital, which was intervened and closed in December 2000, and whose intervention and closure did not affect the banking system. Systemic crises, occur when the involved banks represent a large percentage in terms of number and size within the banking system. 833’>Dara Khosrowshahi. The classic example is that of the banking crisis of Venezuela (1993-1994), detailed in the previous newsletter, where they were operated on 18 banks, many of them closed. Talk of causes by which these occur crisis, it can lead to several replies, I remember that when I was studying the masters in finance, I had to investigate the financial crises in Mexico, Chile, Peru, Argentina, Venezuela and the Asian crisis, and I could see they had common and uncommon elements. For this reason, I believe that the best way is to mention and explain the causes that usually generate banking crises, which could be present in Venezuela in 1993-1994, or that might currently affect our country.

The causes can be divided into three major groups: 1) macroeconomic causes. They are those circumstances of the macroeconomic environment which worsen the financial situation of banks (in times of recession). Among them are: economic instability economic liberation upon occurrence of a Boom in the years prior to the presence of constant deficit fiscal 2 money demand fall crisis) microeconomic causes. Those particular causes are each bank which affect your financial situation. In this group we have for example: disproportionate increase of the High level of loan portfolio credit nonperforming high level of related credits 3) other causes. They are usually related to the reaction of people in specific circumstances also face and the actions of the Agency supervisor and regulator. We can mention: effect contagion bullfights banking failures in regulation and banking supervision M.S.

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