The world has endured a deep financial crisis and a great recession. Emerging markets are performing much better than they have in the past, especially in Latin America. The huge difference between the recent crisis and previous ones in emerging economies is that this time ‘it was not our fault’. The evidence from the emerging countries facing this unprecedented global downturn indicates that p...

Credit spreads display occasional spikes and are more strongly countercyclical in times of elevated financial stress. Financial crises extreme cases this nonlinear behavior, featuring skyrocketing credit spreads, sharp losses bank equity, deep recessions. We develop estimate a macroeconomic model with banking sector which banks’ leverage constraints occasionally binding equity issuance is endog...

Often, systemic banking crises initiate from one or more banks and affect countries by rapid spreading in the banking network, financial markets and economy of countries. According to Reinhart & Rogoff (2009) in the book titled "This time is Different," financial crises are pointed as an equal opportunity menace for high-income countries and emerging markets. Although The International Mo...

The increasing frequency and scope of financial crises has made global financial stability one of the major concerns of economic policy and decision makers. Under this highly complex environment, supervision of the financial system has to be thought of as a systemic task, focusing not only on the strength of the institutions but also on the interdependent relations among them, unraveling the st...

The magnitude and frequency of recent financial crises underscore the importance of understanding financial instability for the purpose of crisis prevention and crisis management. This paper brings together and adds structure to the theoretical literature on financial instability and the implications they carry for policy-makers. In addition to clarifying the theoretical underpinnings for study...

In the wake of the global financial crisis much attention has been devoted to the role of complexity of bank linkages in the transmission of shocks. We shed light on this issue using a rich dataset on international syndicated bank lending matched with bank financial information. To study how financial crises spread through the global banking network, we distinguish among channels such as banks'...

In June 2008 Justin Yifu Lin was appointed chief economist of the World Bank, right before the eruption of the worst global financial and economic crisis since theGreat Depression. Drawing on experience from his privileged position, Lin offers unique reflections on the cause of the crisis, why it was so serious and widespread, and its likely evolution. Arguing that conventional theories provide...

I use a large cross country data set and panel probit analysis to investigate the way in which the interaction between trade and financial openness affect the probability of external crises. This analysis is related to debate on the adequate sequencing of reform. I also investigate the role played by current account and fiscal imbalances, contagion, international reserves holdings, and the exch...