The Causes and Propagation of Financial Instability: Lessons for Policymakers

In the last twenty years, countries throughout the world have experienced severe bouts of financial instability. Banking crises have become so common that it is the rare country that has not experienced one, while full-scale financial crises have struck some economies with devastating effects. Financial instability, although a particularly severe problem for emerging-market countries which suffer disproportionately when it occurs, has struck industrialized countries just as frequently.