Skip to main content
SpringerLink
Log in

From Liberalization to Financial Crisis

  • Chapter
Macroeconomic and Structural Adjustment Policies in Zimbabwe

Part of the book series: International Political Economy Series ((IPES))

  • 87 Accesses

Abstract

On 14 November 1997, the Zimbabwe dollar crashed against most major currencies, sparking a major currency crisis, followed by financial market instability. One merchant bank collapsed, and a building society was rescued amid major problems in the banking sector. The ‘November’ crash occurred against the backdrop of severe balance of payments pressure dating back several months, and market uncertainty regarding a potential devaluation. The local unit crashed again in July and October 1998. Selling rates of the Zimbabwe dollar against the US dollar plunged from about Z$20 to over Z$32 during August/September 1998 to peak at Z$44/US$ in October 1998. For most of 1999, it traded within a narrowband of between Z$38 and Z$39/ US$, mainly due to a voluntary, informal agreement between the Reserve Bank and foreign currency dealers (mainly commercial banks) to achieve artificial stability at these levels. This is by far the biggest and most prolonged period of currency volatility in recent years.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
eBook
USD 16.99
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Bernanke, B. (1983) ‘Nonmonetary effects of the financial crisis in the propagation of the Banking Crisis’, American Economic Review, vol. 73, pp. 257–76.

    Google Scholar 

  • Bernanke, B. and M. Getier (1989) ‘Financial fragility and economic performance’, Quarterly Journal of Economics, vol. 105, pp. 87–114.

    Article  Google Scholar 

  • Calomiris, C. and G. Gorton (1991) ‘The origins of bank panics: models, facts and bank regulation,’ in R. Hubbard (ed.), Financial Market and Financial Crises. Chicago: University of Chicago Press.

    Google Scholar 

  • Calvo, G., L. Leiderman and C. Reinhart (1992) ‘Capital inflows and real exchange rate appreciation in Latin America,’ IMF Staff Papers, vol. 40, pp. 108–51.

    Google Scholar 

  • Calvo, G. and L. Leiderman (1993) ‘The capital inflows problem: concepts and issues’ IMF Policy Analysis and Assessment Paper, no. PPAA 93/10, Washington DC.

    Google Scholar 

  • Caprio, G. and D. Klingebiel (1996) ‘Bank insolvencies: cross-country experience,’ Policy Research Working Paper 1620. Washington DC: World Bank.

    Google Scholar 

  • Choudhri, E. and L. Kochin (1980) ‘The exchange rate and the international transmission of the business cycle disturbances’, Journal of Money, Credit and Banking, vol. 12, pp. 565–74.

    Article  Google Scholar 

  • Demirguc-Kunt, A. and E. Detragiache (1997) ‘The determinants of banking crises: evidence from developing and developed countries,’ IMF Working Paper, WP/97/106, Washington DC.

    Google Scholar 

  • Diamond, D. and P. Dybvig (1984) ‘Bank runs, deposit insurance and liquidity’, Journal of Political Economy, vol. 91, no. 3, pp. 401–19.

    Article  Google Scholar 

  • Diaz-Alejandro, C. (1985) ‘“Good-bye financial repression, hello financial crash,”’ Journal of Development Economics, vol. 19, pp. 1–24.

    Article  Google Scholar 

  • Eichengreen, B., A. Rose and C. Wyplosz (1996) ‘Contagious Currency Crises’, NBER Working Paper, no. 5681.

    Google Scholar 

  • Flood, Robert P. and Peter M. Garber (1984) ‘Collapsing exchange rate regimes; some linear examples’, Journal of International Economics, vol. 17, nos 1–2, pp. 1–13.

    Article  Google Scholar 

  • Frankel, J. and A. Rose (1996) ‘Currency Crashes in Emerging Markets; Empirical Indicators’, NBER Working Paper, no. 543.

    Google Scholar 

  • Friedman, M, and A. Schwartz, (1963) A Monetary History of the United States, 867–1960. Princeton, NJ: Princeton University Press.

    Google Scholar 

  • Ghosh Atish (1995) ‘Does the Nominal Exchange Rate Matter’, CSAE, IMF Working Paper 95/121, November.

    Google Scholar 

  • Government of Zimbabwe (1998) ZIMPREST Document. Harare: Government Printer.

    Google Scholar 

  • Greenwald, B. and J. Stiglitz (1988) ‘Information, financial constraints and business fluctuations’, in M. Khan and S. Tsiang (eds), Expectations and Macroeconomics. Oxford: Oxford University Press.

    Google Scholar 

  • International Monetary Fund (various years) International Financial Statistics. CD-ROM.

    Google Scholar 

  • Kaminsky, G., S. Lizondo and C. Reinhart, (1997) ‘Leading Indicators of Currency Crises,’ IMF Working Paper, WP/97/9.

    Google Scholar 

  • Khan, M. and C. Reinhart, (1996) ‘Capital Flows in the APEC Region’, IMF Occasional Paper.

    Google Scholar 

  • Krugman, P. (1979) ‘A model of balance of payment crisis’, Journal of Money, Credit and Banking, vol. II, no. 3, pp. 311–25.

    Article  Google Scholar 

  • Mendis, C. (1999) ‘Monetary effects of terms of trade shocks and capital flows in small open economies’, DPhil thesis, University of Oxford.

    Google Scholar 

  • Minsky, P. (1977) John Maynard Keynes. New York: Columbia University Press.

    Google Scholar 

  • Mishkin, F. (1996) ‘Understanding Financial Crises’, NBER Working Paper, no. 5600.

    Google Scholar 

  • Obstfeld, Maurice (1994) ‘The logic of currency arises’, National Bureau of Economic Research, Working Paper, no. 4640.

    Google Scholar 

  • Reserve Bank of Zimbabwe, Quarterly Statistical Review. Harare.

    Google Scholar 

  • Stiglitz, J. and A. Weiss (1981) ‘Credit rationing in markets with imperfect information,’ American Economic Review, vol. 72, pp. 393–410.

    Google Scholar 

  • Taylor, L. and S. O’Connell (1985) ‘A Minsky crisis,’ Quarterly Journal of Economics, vol. 10, pp. 871–85.

    Article  Google Scholar 

  • Sachs, J., A. Tornell and A. Velasco (1996) ‘Financial crises in emerging markets’, Brookings Papers on Economic Activity. Washington DC: Brookings Institution.

    Google Scholar 

  • Veblen, T. (1904) The Theory of Business Enterprise. New York: Charles Scribner.

    Google Scholar 

  • World Bank (1998) World Development Indicators. CD-ROM.

    Google Scholar 

Download references

Authors
  1. Chandima Menais
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. Department of Economics, University of Zimbabwe, Zimbabwe

    Clever Mumbengegwi (Dean of the Faculty of Social Studies and Senior Lecturer) (Dean of the Faculty of Social Studies and Senior Lecturer)

Copyright information

© 2002 Palgrave Macmillan, a division of Macmillan Publishers Limited

About this chapter

Cite this chapter

Menais, C. (2002). From Liberalization to Financial Crisis. In: Mumbengegwi, C. (eds) Macroeconomic and Structural Adjustment Policies in Zimbabwe. International Political Economy Series. Palgrave Macmillan, London. https://doi.org/10.1057/9780230391048_7

Download citation

Publish with us

Policies and ethics

Search

Navigation