Identifying the Influential Factors of Probability of Crisis in the Banking System in the Selected Countries

In this paper, we analyze the modified money market pressure index and the factors influencing the probability of a banking crisis with using Logit panel model and dataset include the annual data of banking system from 158 countries (including Iran) during the period 1998 (after the financial crisis of Asian countries) by 2015. In this regard, the Modified Money Market Pressure Index shows most of the selected countries were involved in the banking crisis in 2007. The results of the estimation of Logit model indicate that the cost-to-income ratio of the banking system, the internal credit to the private sector to GDP, and inflation increase the probability of a banking crisis. Although, inflation has an inverse u shaped relationship with the probability of a banking crisis.