This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises—currency crises, sudden stops, debt crises, and banking crises—and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.

The Role of Crises in Shaping Financial Systems: From the Global Financial Crisis to COVID-19 underscores the role of crises as turning points for the financial sector and its interactions with the real economy. It sheds new light on the financial industry through the lens of three recent crises – the global financial crisis, the sovereign debt crisis, and the COVID-19 pandemic. The book provides in-depth insight into the financial systems in European Economic Area countries, accentuating the role of crises in shaping the condition and development of the financial arena. The authors pay special attention to the differences between “old” and “new” Europe, i.e. countries that joined the EU in 2004 or later. It explores the implications of recent turbulences for financial institutions, financial markets, and public finance, and their relationship with the economy. The book examines low or negative interest rates, non-standard monetary policy, fiscal stimulus, dense safety nets, regulatory inflation, weak profitability of the financial sector, and the sovereign-bank nexus. Post-crisis developments are assessed, comprehensively and empirically, from both macro- and microeconomic perspectives to help readers understand the nature of policy measures and their socio-economic implications. The authors outline their predictions for the future of financial systems, focusing on the structural changes and legacy of the COVID-19 crisis and global financial interlinkages. The book adopts both theoretical and practical approaches to explore the key issues and, as such, will appeal to academics and students of financial economics and international finance, as well as policymakers and financial regulators.

This book examines the differences and commonalities of eight global financial crises since the late nineteenth century (including the Great Depression of the 1930s and the Financial Debacle of the early twenty-first century) to give insights into how the financial landscape has - or has not - been reshaped after a systemic shock.

A corporate guide to crisis management in volatile financial markets Current financial crises in Argentina, Japan, and Turkey are being played out on the front pages of newspapers, and these are just the most recent financial crises that have rolled across the globe in the last decade and whose far-reaching impact hurts business around the world. Dangerous Markets: Managing in Financial Crises recognizes that no global corporation or financial institution can afford to ignore the potential of a financial storm and will help top management and financial professionals navigate through this often disastrous maze. While many books discuss financial crises and their ramifications, none has presented an action plan for managing these storms—until now. Dangerous Markets: Managing in Financial Crises presents a method that allows executives and financial professionals to recognize the warning signs of a financial crisis and act appropriately before the situation spirals out of control. Based on years of research and practice in cleaning up the mess, McKinsey consultants Barton, Newell, and Wilson reveal the warning signs of potential financial catastrophes and provide unique principles that can be followed to shape and manage a strategy for survival.

The lingering effects of the economic crisis are still visible—this shows a clear need to improve our understanding of financial crises. This book surveys a wide range of crises, including banking, balance of payments, and sovereign debt crises. It begins with an overview of the various types of crises and introduces a comprehensive database of crises. Broad lessons on crisis prevention and management, as well as the short-term economic effects of crises, recessions, and recoveries, are discussed.

Why do different countries have such different financial systems? Is one system better than the other? This text argues that the view that market-based systems are best is simplistic, and suggests that a more nuanced approach is necessary.

How investor expectations move markets and the economy The collapse of Lehman Brothers in September 2008 caught markets and regulators by surprise. Although the government rushed to rescue other financial institutions from a similar fate after Lehman, it could not prevent the deepest recession in postwar history. A Crisis of Beliefs makes us rethink the financial crisis and the nature of economic risk. In this authoritative and comprehensive book, two of today’s most insightful economists reveal how our beliefs shape financial markets, lead to expansions of credit and leverage, and expose the economy to major risks. Nicola Gennaioli and Andrei Shleifer carefully walk readers through the unraveling of Lehman Brothers and the ensuing meltdown of the US financial system, and then present new evidence to illustrate the destabilizing role played by the beliefs of home buyers, investors, and regulators. Using the latest research in psychology and behavioral economics, they present a new theory of belief formation that explains why the financial crisis came as such a shock to so many people—and how financial and economic instability persist. A must-read for anyone seeking insights into financial markets, A Crisis of Beliefs shows how even the smartest market participants and regulators did not fully appreciate the extent of economic risk, and offers a new framework for understanding today’s unpredictable financial waters.