Country Banking Crisis Prediction Using Transvariation Analysis

The main purpose of this paper is to investigate macroeconomic variables that are predictive of banking crisis. We focus on selecting variables that have high predictive power to discriminate between two groups of countries: the sound and the distressed. We consider a sample of 50 emerging market and developing countries during 1990–2005 time period, and apply generalized estimating equations as well as univariate, bivariate and trivariate...