The Challenge of Predicting Economic Crises - Finance & Development - June 1999 - Sunil Sharma

financial markets over the last decade, large capital flow reversals can occur quite quickly, considerably shortening the time policymakers have to respond. As a consequence, and motivated in part by the recent crises in Europe (1992), Mexico (1994–95), and Asia (1997–98), researchers are taking a fresh look at the determinants of currency and banking crises and are attempting to develop early warning systems to signal when trouble may be brewing in currency markets and banking systems. The lack of transparency in the operation of financial systems, especially in emerging markets, considerably complicates this task.