Financial Policies and the Prevention of Financial Crises in Emerging Market Countries

42 Pages Posted: 25 Jan 2001 Last revised: 20 Oct 2010

See all articles by Frederic S. Mishkin

Frederic S. Mishkin

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Date Written: January 2001

Abstract

This paper outlines a set of financial policies that can help make financial crises less likely in emerging market countries. To justify these policies, the paper first explains what a financial crisis is, the factors that promote a financial crisis and the dynamics of a financial crisis. It then examines twelve basic areas of financial policies to prevent financial crises: 1) prudential supervision, 2) accounting and disclosure requirements, 3) legal and judicial systems, 4) market-based discipline, 5) entry of foreign banks, 6) capital controls, 7) Reduction of the role of state-owned financial institutions, 8) restrictions on foreign-denominated debt, 9) elimination of too-big-to-fail in the corporate sector, 10) sequencing financial liberalization, 11) monetary policy and price stability, 12) exchange rate regimes and foreign exchange reserves.

Suggested Citation

Mishkin, Frederic S., Financial Policies and the Prevention of Financial Crises in Emerging Market Countries (January 2001). NBER Working Paper No. w8087, Available at SSRN: https://ssrn.com/abstract=257831

Frederic S. Mishkin (Contact Author)

Columbia Business School - Finance and Economics ( email )

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National Bureau of Economic Research (NBER)

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