ringledman
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An interesting read on the historical average falls and length of downturn following a banking crises.
Key points that history shows -
- Broadly speaking, financial crises are protracted affairs. More often than not, the aftermath of severe financial crises share three characteristics.
- Asset market collapses are deep and prolonged.
- Real housing price declines average 35 percent stretched out over six years,
- while equity price collapses average 55 percent over a downturn of about three and a half years.
- The aftermath of banking crises is associated with profound declines in output and employment.
- The unemployment rate rises an average of 7 percentage points over the down phase of the cycle, which lasts on average over four years.
- Output falls (from peak to trough) an average of over 9 percent, although the duration of the downturn, averaging roughly two years, is considerably shorter than for unemployment.
- The real value of government debt tends to explode, rising an average of 86 percent in the major post–World War II episodes.