Credit booms, financial fragility and banking crises

- We model the determinants of banking crises using a new country-level panel database.
- We allow for the interaction of capital surges, credit booms and financial fragility.
- Booms increase the likelihood of crises only in relatively fragile financial systems.

Using a new country-level panel database, we explore effect of capital inflow surges, credit booms and financial fragility on the probability of banking crises. We find that booms increase the probability of a crisis only in relatively fragile financial systems.