Financial Crises in Emerging Markets

Recent financial crises illustrate the risks of financial volatility and macroeconomic instability during the process of economic growth and development. They also raise issues regarding the management of risks associated with liberalization and global integration. Concerns about the implications of international capital flows for developing countries have grown with the sharply increased volume of these flows since the late 1980s. Some have argued that emerging markets have been the innocent victims of mercurial global investors, while others have questioned the appropriateness of specific policies in the emerging markets themselves. The essays in this volume provide analysis and evidence on the determinants of currency and banking crises in emerging markets, the specific roles of capital flows and the financial sector, and the appropriateness of various policy responses.

The essays in this volume examine theoretical and policy issues associated with recent financial crises in emerging markets. The essays address four broad questions. First, how prevalent have financial crises been in emerging markets, and what have been their general determinants? Second, what are the specific roles of capital flows and the financial sector in the occurrence of these crises? Third, how might institutional and financial structure characteristics have affected the long run vulnerability of countries to crises? Fourth, what are that appropriate policies to reduce the occurrence and severity of financial crises?