• Ms. Bhupendra Kaur Saluja
• Dr. Anindita Chatterjee

This article analyses the complex interplay between macroeconomic shocks, banking sector crises, and their enduring effects on economic development. Macroeconomic shocks such as recessions, abrupt capital withdrawals, or variations in commodity prices frequently disturb economic activity, engendering extensive uncertainty and volatility. Simultaneously, crises in the banking sector intensify these disruptions by undermining the financial system's capacity to distribute credit effectively, resulting in significant economic contractions. This research utilizes a cross-country panel data methodology with time-series analysis to investigate how banking crises exacerbate the impacts of macroeconomic shocks and their ensuing long-term consequences on economic productivity, capital accumulation, and GDP growth. The empirical evidence indicates that banking crises substantially hinder economic development paths, mostly due to interruptions in financial intermediation, limited credit access, and a surge in non-performing loans, which prolong recovery efforts. The study reveals policy responses, including monetary interventions, fiscal policies, and regulatory measures, as crucial determinants affecting the length and intensity of crises. Additionally, structural vulnerabilities such as inadequate institutions, little regulatory monitoring, and unstable financial systems can intensify economic stagnation post-crisis. This study emphasizes the need of establishing resilient financial systems and executing prudent macroeconomic policies to alleviate the enduring impacts of crises. The results provide significant insights for policymakers, highlighting the need for early action, strong institutional frameworks, and measures to improve financial stability.

Macroeconomic shocks, banking sector crisis, economic growth, long-term effects, financial stability, structural vulnerabilities

"Macroeconomic Shocks, Banking Sector Crisis And Their Long-Term Effects On Economic Growth ", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.12, Issue 1, page no.202-215, January-2025, Available :http://www.jetir.org/papers/JETIRGS06025.pdf

"Macroeconomic Shocks, Banking Sector Crisis And Their Long-Term Effects On Economic Growth ", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.12, Issue 1, page no. pp202-215, January-2025, Available at : http://www.jetir.org/papers/JETIRGS06025.pdf