Are all banking crises alike? The Japanese experience in international comparison

This paper examines episodes of banking sector distress for a large sample of developed and developing countries, highlighting the experience of Japan . We estimate a multivariate probit model that links the likelihood of bank ing problems to a set of macroeconomic variables and institutional characte ristics. The model predicts a high probability of banking sector distress i n Japan in the early 1990s. The likelihood of an episode of banking distres s rose in line with the sharp drop in asset prices, deepening recession and a "moral hazard" problem (financial liberalization combined with explicit deposit insurance). (C) 1999 Academic Press. Journal of Economic Literature Classification Numbers: E44, G21, O16.