The Banking Crises and Provision for Recovery Plan - The Case Studies of Brazil and Argentina

The incidences of banking crises are de facto contemplated as the historical experiences of many countries, so that based upon the existing investigations in recent decades, there have been nearly 300 cases of banking crises in different countries, in toto. However, the historical deliberations of the past and current events prima facie, indicate that they may share the analogous features, which per se can pave the way for policy makers to take the propitious measures against the ensuing banking crises. In practice, the banking crises may occure when there will be the price bubble on the assets side and de jure, we shall be witness of exorbitant extensions of credits or the so called "Credit Boom" in the economy, in which it can perpetuate Viz-a-Viz unaccommodative government policy measures to bulwark the financial system and/or delay in the pernicious outbreek of banking crises Sine die. In this context, with respect to unsuccessful thrives of certain countries to repress the crises, the Latin America can be an appropriate instance for encountering the banking crises and in turn the empirical studies of Latin America may ply as a harbinger for deep and précise diagnosis of causes and effects of crises and utilization of auspicious or discomfited measures to impede the crises, Sine qua non. It is an axiomatic fact that the Latin American countries had traumatic escapade in the post crises era and by dent of restructuring their respective banking systems and adoption of felicitous policies that had been accomplished, they were able to restrain and minimize the vicious menace of crises, Ipso facto. In this paper, an attempt is made to investigate the incidence of banking crises and the modus operandi of bailout for financial rescue of Brazil and Argentina which are axiologically envisaged as major and leading economies of that region, Pro rata. The results of this study stipulate that though the procedures for bailout plan of any country in the time of banking crises may differ from each other which are based upon their respective economic circumstances and current exigencies, but, the prompt and apt contrivances may have prosperous and virtual impacts on the financial structure of the economy A fortiori. Besides, in consonance with the findings of this study, we may formulize the contingent bailout plan for banking network of Iran based upon the experiences of these two countries to facilitate the safe exit from the probable banking crises, Sui generis.