Inside European Financial Instability: Main Causes and Possible Solutions. (15th November 2014)

• Record Type: Journal Article
• Authors: Bonamini, Giulia; D'Apice, Vincenzo; Forte, Antonio
• Is Part Of: Economic notes. Volume 44:Number 1(2015:Feb.)
• Page Start: 123
• Page End: 149
• Publication Date: 2014-11-15
• Subjects: Economics -- Periodicals; 330.9
• DOI: 10.1111/ecno.12026
• Languages: English
• ISSNs: 0391-5026

Abstract

<abstract abstract-type="main"> <title> <x xml:space="preserve">Abstract</x> </title> <sec id="ecno12026-sec-0001" sec-type="section"> <p> <italic>Since 2010, some European countries have been going through a difficult period of economic and financial fragility. The aim of this paper is to review the main causes of European financial instability. Since the analysis reflects an important interconnection between public debt and banking stability, we empirically investigate this interaction through a Granger causality analysis. Testing the possible existence of Granger causal relationships between sovereign debt and banking stability allows us to identify countries in which a sovereign crisis caused a banking crisis and vice versa. Finally, we describe possible solutions in order to exit from the crisis and the economic policy implications</italic>.</p> </sec> </abstract>