Can Emerging Market Central Banks Bail Out Banks? A+L4848 Cautionary Tale From Latin America ISBN: 9781463942250 Platform/Publisher: Ebook Central / International Monetary Fund Digital rights:Users: Unlimited; Printing: Limited; Download: 7 Days at a Time Subjects: Business/ Management; Economics;
This paper investigates whether developing and emerging market countries can implement monetary policies similar to those used by advanced countries during the recent global crisis - injecting significant amounts of money into the financial system without facing major short-run adverse macroeconomic repercussions. Using panel data techniques, the paper analyzes episodes of financial turmoil in 16 Latin America during 1995-2007. The results show that developing and emerging market countries should be cautious because injecting money on a large scale into the financial system may fuel further macroeconomic instability, increasing the chances of simultaneous currency crises.