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Moazzam Farooq and Sajjad Zaheer
Rapid growth of Islamic banking in developing countries is accompanied with claims about its relative resilience to financial crises as compared to conventional banking. However, little empirical evidence is available to support such claims. Using data from Pakistan, where Islamic and conventional banks co-exist, we compare these banks during a financial panic. Our results show that Islamic bank branches are less prone to deposit withdrawals during financial panics, both unconditionally and after controlling for bank characteristics. The Islamic branches of banks that have both Islamic and conventional operations tend to attract (rather than lose) deposits during panics, which suggests a role for religious branding. We also find that Islamic bank branches grant more loans during financial panics and that their lending decisions are less sensitive to changes in deposits. Our findings suggest that greater financial inclusion of faith-based groups may enhance the stability of the banking system.
Davide Furceri, Mr. Lorenzo E. Bernal-Verdugo, and Mr. Dominique M. Guillaume
Using a sample of 97 countries spanning the period 1980?2008, we estimate that financial crises have a large negative impact on unemployment in the short term, but that this effect rapidly disappears in the medium term in countries with flexible labor market institutions, whereas the impact of financial crises is less pronounced but more persistent in countries with more rigid labor market institutions. These effects are even larger for youth unemployment in the short term and long-term unemployment in the medium term. Conversely, large upfront, or gradual but significant, comprehensive labor market policies have a positive impact on unemployment, albeit only in the medium term.
Moazzam Farooq and Sajjad Zaheer

Rapid growth of Islamic banking in developing countries is accompanied with claims about its relative resilience to financial crises as compared to conventional banking. However, little empirical evidence is available to support such claims. Using data from Pakistan, where Islamic and conventional banks co-exist, we compare these banks during a financial panic. Our results show that Islamic bank branches are less prone to deposit withdrawals during financial panics, both unconditionally and after controlling for bank characteristics. The Islamic branches of banks that have both Islamic and conventional operations tend to attract (rather than lose) deposits during panics, which suggests a role for religious branding. We also find that Islamic bank branches grant more loans during financial panics and that their lending decisions are less sensitive to changes in deposits. Our findings suggest that greater financial inclusion of faith-based groups may enhance the stability of the banking system.

International Monetary Fund. Western Hemisphere Dept.

and in conjunction with the Central Bank of Barbados, hosted a three-day Conference on the theme “Building Resilience to Financial Crises in the Caribbean: The Role of Crisis Management Policies, Metrics and Plans” in March 2016. This Conference brought together 74 stakeholders from national regulatory authorities, the regional regulatory associations and key international bodies (including the IMF, World Bank and the FSB) to discuss how the Caribbean region could best approach the design of institutional and operational frameworks to withstand financial sector and

International Monetary Fund. Western Hemisphere Dept.

) improving the capacity of regulators in all segments of the financial system on crisis prevention, preparedness/management, and resolution frameworks. CARTAC conducted training on financial crisis management for the regulatory staff of GARFIN and in conjunction with the Central Bank of Barbados, hosted a three-day Conference on the theme “Building Resilience to Financial Crises in the Caribbean: The Role of Crisis Management Policies, Metrics and Plans” in March 2016. This Conference brought together 74 stakeholders from national regulatory authorities, the regional

International Monetary Fund. Western Hemisphere Dept.

the theme “Building Resilience to Financial Crises in the Caribbean: The Role of Crisis Management Policies, Metrics and Plans” in March 2016. This Conference brought together 74 stakeholders from national regulatory authorities, the regional regulatory associations and key international bodies (including the IMF, World Bank and the FSB) to discuss how the Caribbean region could best approach the design of institutional and operational frameworks to withstand financial sector and economy- wide disruptions. Drawing on new information presented at this conference

International Monetary Fund

conducts road shows to bring new products or market innovations to the attention of investors, and videoconferences are organized as requested to favor exchange of views, preferences, and information between the PDD and investors. Dealing with exceptional events and financial crises The system of auction, settlement, and trading for Italian government securities has shown a good resilience to financial crises or disruption at the continental or world level. For instance, in 1992, when the Italian lira was devalued and forced out of the fixed-rate regime of the

Davide Furceri, Mr. Lorenzo E. Bernal-Verdugo, and Mr. Dominique M. Guillaume

expected, economies that are characterized by a more flexible labor market have higher increase in unemployment in the short term, reflecting higher elasticity of unemployment to output. The second panel shows the cumulative changes in unemployment following a financial crisis, and the composite indicator of labor market flexibility. The negative relation between the medium-term effect of financial crises on unemployment and labor market flexibility suggests that labor market resilience to financial crises is a positive function of labor market flexibility. Thus, while

Jean-Marc B. Atsebi, Jean-Louis Combes, and Alexandru Minea

be developed along several dimensions. First, most of the existing papers use trade data only for goods and do not account for trade in services, which may have greater resilience to financial crises according to Borchert and Mattoo (2010) and Ariu (2016) . Second, since financial crises are likely not exogenous, existing studies, with the notable exception of Asonuma et al. (2016) , may not capture a causal effect. Third, given the focus on the trade losses from each crisis taken separately without controlling for other crises, the effects may be overestimated

Jean-Marc B. Atsebi, Jean-Louis Combes, and Alexandru Minea
The “Great Trade Collapse” triggered by the 2008-09 crisis calls for a careful assessment of the trade losses from financial crises. We adopt a more detailed perspective by looking at the response of different types of trade (i.e. agricultural, mining, and manufactured goods, and services) following various types of financial crises (i.e. debt, banking, and currency crises). Estimations performed on the 1980-2018 period using a combination of impact assessment and local projections to capture a causal dynamic effect running from financial crises to the trade activity show that the collapse of total trade is long-lasting and mainly driven by the fall of manufacturing and to some extent services trade. These causal effects are found to operate through three channels: a structural, a demand-side, and a supply-side channel. By contributing to the understanding of the trade effects of financial crises, our analysis provides insightful support for the design and implementation of policies aimed at coping with these effects.