Working Paper: CEPR ID: DP9310
Authors: Stijn Claessens; Ayhan Kose; Luc Laeven; Fabin Valencia
Abstract: The global financial crisis of 2007-09 has led to an intensive research program analyzing a wide range of issues related to financial crises. This paper presents a summary of a forthcoming book, Financial Crises: Causes, Consequences, and Policy Responses, that includes 19 contributions examining these issues and distilling policy lessons. The book covers a wide range of crises, including banking, balance-of-payments, and sovereign debt crises. It reviews the typical patterns prior to crises, considers lessons on their antecedents, and analyzes their evolution and aftermath. It also provides valuable policy lessons on how to prevent, contain and manage financial crises.
Keywords: asset price busts; banking crises; credit busts; currency crises; debt crises; defaults; global financial crisis; prediction of crises; restructuring; sudden stops; welfare cost
JEL Codes: E32; E5; E6; F44; G01; H12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| rapid increases in asset prices (G19) | increase the risk of financial crises (F65) |
| credit booms (F65) | increase the risk of financial crises (F65) |
| regulatory failures (G18) | increase the risk of financial crises (F65) |
| expansion of marginal loans during credit booms (E51) | increase systemic risks (F65) |
| inadequate regulation (G18) | contribute to systemic risk (F65) |
| interconnectedness of global financial systems (F65) | exacerbate crises (H12) |
| increased leverage (G32) | increase the risk of financial crises (F65) |
| declining lending standards (G21) | increase the risk of financial crises (F65) |