Bank failure: Evidence from the Colombian financial crisis
نویسندگان
چکیده
Bank-speci c determinants of bank failure during the nancial crisis in Colombia are identi ed and studied using duration analysis. The process of failure of banks and related nancial institutions during that period can be explained by di¤erences in nancial health and prudence across institutions. The capitalization ratio is the most signi cant indicator explaining bank failure. Increases in this ratio lead to a reduction in the hazard rate of failure at any given moment in time. This ratio exhibits a non-linear component. At lower levels of capitalization small di¤erences in capitalization are associated with larger di¤erences in failure rates. Our results thus provide empirical support for existing regulatory practice. Other important variables explaining bank failure dynamics are the banks size and profitability. JEL Classi cation: C41; E4; E58; G21; G23; G38
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