Financial Crises: Explanations, Types, and Implications

67 Pages Posted: 5 Feb 2013

See all articles by Stijn Claessens

Stijn Claessens

Bank for International Settlements (BIS)

M. Ayhan Kose

Development Prospects Group at the World Bank

Multiple version iconThere are 3 versions of this paper

Date Written: February 2013


This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises - —currency crises, sudden stops, debt crises, and banking crises - —and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.

Keywords: asset booms, banking crises, credit booms, crises prediction, currency crises, debt crises, defaults, financial restructuring, policy implications, Sudden stops

JEL Classification: E32, E5, E6, F44, G01, H12

Suggested Citation

Claessens, Stijn and Kose, M. Ayhan, Financial Crises: Explanations, Types, and Implications (February 2013). CEPR Discussion Paper No. DP9329. Available at SSRN:

Stijn Claessens (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
CH-4002 Basel

M. Ayhan Kose

Development Prospects Group at the World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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