Working Paper: NBER ID: w16754
Authors: Assaf Razin; Steven Rosefielde
Abstract: We survey three distinct types of financial crises which took place in the 1990s and the 2000s: 1) the credit implosion leading to severe banking crisis in Japan; 2) The foreign reserves' meltdown triggered by foreign hot money flight from frothy economies with fixed exchange rate regimes of developing Asian economies, and 3) The 2008 worldwide debacle rooted in financial institutional opacity and reckless aggregate demand management, epi-centered in the US, that spread almost instantaneously across the globe, mostly through international financial networks.
Keywords: financial crises; banking crisis; credit implosion; global financial crisis
JEL Codes: E02; F3; N1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Speculative bubble in land and stock prices (E32) | Japanese banking crisis (F65) |
| Japanese banking crisis (F65) | Contraction in credit and economic activity (E44) |
| Excessive lending based on inflated asset values (F65) | Credit crunch (E51) |
| Cultural factors in Japan (Z18) | Prolonging the crisis (H12) |
| Foreign capital flight (F21) | Asian financial crisis (F65) |
| Asian financial crisis (F65) | Severe economic contractions in Asian economies (F65) |
| Systemic failures in financial regulation (G18) | 2008 global financial crisis (F65) |
| Proliferation of complex financial instruments (F65) | Systemic failures in financial regulation (G18) |
| Systemic failures in financial regulation (G18) | Widespread panic and liquidity crises (E44) |