Financial Crises: Explanations, Types, and Implications; by Stijn Claessens and M. Ayhan Kose; imf working Paper 13/28; January 1, 2013

This Working Paper should not be reported as representing the views of the IMF. 

The views expressed in this Working Paper are those of the author(s) and do not necessarily 

represent those of the IMF or IMF policy. Working Papers describe research in progress by the 

author(s) and are published to elicit comments and to further debate. 

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 Contents Page 

I. Introduction ............................................................................................................................3

 

II. Explaining Financial Crises ..................................................................................................4

 

A. Asset Price Booms and Busts....................................................................................5

 

B. Credit Booms and Busts ............................................................................................8

 

C. Impact of Asset Price and Credit Busts ...................................................................10

 

III. Types of Financial Crises...................................................................................................11

 

A. Currency Crises .......................................................................................................12

 

B. Sudden Stops ...........................................................................................................14

 

C. Foreign and Domestic Debt Crises ..........................................................................15

 

D. Banking Crises ........................................................................................................18

 

IV. Identification, Dating and Frequency of Crises .................................................................22

 

A. Identification and Dating ........................................................................................23

 

B. Frequency and Distribution .....................................................................................26

 

V. Real and Financial Implications of Crises ..........................................................................27

 

A. Real Effects of Crises ..............................................................................................28

 

B. Financial Effects of Crises ......................................................................................30

 

VI. Predicting Financial Crises ................................................................................................31

 

VII. Conclusions ......................................................................................................................34

 

 

References ................................................................................................................................41 

 

Figure 

1. Evolution of House Price During Financial Crises .............................................................56 

2a. Credit and Asset Price Booms ............................................................................................57 

2b. Credit Crunches and Asset Price Busts ..............................................................................58 

3.Coincidence of Financial Booms and Crises ........................................................................59 

4. Coincidence of Financial Crises ..........................................................................................60 

5. Average Number of Financial Crises over Decades ............................................................61 

6. Coincidences of Recessions and Crises ...............................................................................62 

7. Real Implications of Financial Crises, Crunches, and Busts ...............................................63 

8. Financial Implications of Crises, Crunches, and Busts........................................................64 

9. Creditless Recoveries ...........................................................................................................65 

 

 

 

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