Proceedings of the 3rd International Conference on Economic Development and Business Culture (ICEDBC 2023)

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Can We Predict Financial Crises?

Authors
Wen Dang1, *, Jiayi Peng2, Ruidan Fan3, Zifei Wang4
1Olive Tree International Academy, BFSU, Hangzhou, 311100, China
2Shanghai World Foreign Language Academy, Shanghai, 200233, China
3Shenzhen College of International Education, Shenzhen, 518000, China
4The Affiliated International School of Shenzhen University, Shenzhen, 518083, China
*Corresponding author. Email: 13357130350@qq.com
Corresponding Author
Wen Dang
Available Online 26 September 2023.
DOI
10.2991/978-94-6463-246-0_7How to use a DOI?
Keywords
Financial Crises; Forecasting; Predictive Regressions; Credit
Abstract

Historically, financial crises have crippled individuals, businesses and global economies; identifying prospective threats accurately can mitigate their repercussions. This paper examines the annual economic statistics in fourteen developed countries from 1870 to 2008. We demonstrate the variations of credit and money aggregates over time, analysing the reasons behind those changes in light of macroeconomic history. We build OLS and logit models to determine the underlying link between financial instability and major macroeconomic indicators, proving that growth in credit aggregates is a salient indicator for a higher likelihood of a financial crisis. We compare the predictive power of GDP, money and credit growth in different eras, taking the Second World War and the 1980s as turning points. The results confirm the significance of credit in forecasting. These findings contribute to the discussion of the predictability of financial crises and provide valuable insights for economic agents.

Copyright
© 2024 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 3rd International Conference on Economic Development and Business Culture (ICEDBC 2023)
Series
Advances in Economics, Business and Management Research
Publication Date
26 September 2023
ISBN
10.2991/978-94-6463-246-0_7
ISSN
2352-5428
DOI
10.2991/978-94-6463-246-0_7How to use a DOI?
Copyright
© 2024 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Wen Dang
AU  - Jiayi Peng
AU  - Ruidan Fan
AU  - Zifei Wang
PY  - 2023
DA  - 2023/09/26
TI  - Can We Predict Financial Crises?
BT  - Proceedings of the 3rd International Conference on Economic Development and Business Culture (ICEDBC 2023)
PB  - Atlantis Press
SP  - 53
EP  - 70
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-246-0_7
DO  - 10.2991/978-94-6463-246-0_7
ID  - Dang2023
ER  -