Chart of the day: September is the cruellest month
Luc Laeven and Fabián Valencia of the IMF have published a working paper on the uses of the fund's database of systemic banking crises. The paper examines responses to crises, revealing that advanced economies are far more likely to employ expansionary fiscal policy than emerging economies. It also reveals the costliest crises in the database, in percentages of GDP. Kuwait's 1982 crisis led to the highest output loss, Indonesia in 1997 the highest fiscal cost, and Guinea-Bissau the highest increase in public sector net debt:
But by far the best chart in the paper is the one at the top of this post, showing that a full quarter of banking crises start in September. The authors offer no explanation. It may even be a spurious correlation. But feel free to speculate...
And the mystery is solved. PostLibertarian writes:
22 of the 25 September crises were from September 2008. There was one global crisis that affected a bunch of countries but the authors are counting it as a distinct crisis for each country.
That’s it! Nothing particularly strange about September. No need for silly theories about harvest cycles and fiscal calendars. No need for philosophical musing about how interesting the aberration is. There’s just a big outlier in the very short and very incomplete data!