Until recently, research on banking crises was inspired mostly by the experiences of the 19th and early 20th century. In particular, the field was dominated by studies of the Great Depression, when numerous and catastrophic bank failures occurred around the world. Beginning in the 1990s, a resurgence of banking crises provided new impetus and new materials to researchers, and a rapidly growing literature is studying the causes and consequences of bank fragility in contemporary economies. This paper surveys this work and tries to highlight directions for future research.
The paper is organised as follows: the next section reviews the basic facts about the recent wave of financial crises. Section 3 presents the two basic methodologies adopted in cross-country empirical studies of the determinants of banking crises, and Section 4 discusses how these models have been used for crisis prediction.
Section 5 reviews the literature and evidence on how various factors contribute to bank fragility. Section 6 surveys work on the economic effects of banking crises. Section 7 concludes by pointing to some of the issues that further research could usefully focus on.
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Cross-Country Empirical Studies of Systemic Bank Distress: A Survey
