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Bank Runs and Banking Policies: Lessons for African Policy Makers

By Edward J. Kane and Tara Rice

Abstract

Although banking crises in Asia and Latin America have grabbed the headlines, the banking systems of many African countries have been under stress for years. Table 1 documents and Figures 1A and 1B map problems observed during 1980-1996 across the continent as a whole. The sources from which the table was compiled report that banking problems were experienced in 50 of the continent’s 56 countries. Many of these problems proved long-lasting and 10 countries experienced additional rounds of banking weakness. Figure 2 shows that the number of countries experiencing banking distress has trended upward over time. Figure 3 plots a frequency distribution for the duration of banking distress in individual countries. Table 2 partly updates Table 1. It summarizes information gleaned from interviews with informed sources and information on major banking failures reported since 1995 on the Lexis-Nexis database for five selected sub-Saharan countries: Kenya, Nigeria, Uganda, Zambia, and Zimbabwe. Lexis-Nexis descriptions of when and why a bank fails focus on directly observable triggering events, such as unserviceable customer runs and proveabl

Year: 2001
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