The concept of a lender of last resort (LLR) stems from a central banking principle dating back to Bagehot more than a century ago. The principle holds that in a financial panic, the central bank should stand ready "to lend freely...whenever the security is good" (Bagehot 1873, 48, 51). This precept implies that in a financial crisis there is a multipleequilibrium situation, and that the good o...

"If there are two or more ways to do something, and one of those ways can result in a catastrophe, then someone will do it." The economic history of the world is replete with recessions and depressions. From the bursting of the British South Sea Bubble and the French Mississippi Bubble in 1720 (which at least one economic historian claims delayed the industrial revolution by 50 years) to the in...

The study examines the economic consequences of regulated disclosure in the banking sector, focusing on its impacts on the stability of banking systems. In a cross-country study of banking systems across 49 countries in the 90s, I find that banking crises are less likely in countries with greater regulated disclosure and transparency. Specifically, banking systems are less vulnerable to crisis ...

The recent financial crises starting from one country (e.g. Mexico in 1994, Thailand in 1997) and spreading as a contagion to others (i.e. the ’tequila’ effect of the Mexican crisis on Argentina and other Latin American countries, the spread to Malaysia, Indonesia, Hong Kong, Korea, Singapore and Taiwan of the Thai crisis, the rapid spread of financial instability after the Russian crisis in th...

This paper evaluates the relative importance of three contagion channels: direct trade, neighborhood effects and financial competition in banking centers. Because these channels are highly correlated, they could easily be confused. However, policy implications are very different depending on the channel and therefore disentangle which channels are more relevant is an important task. This paper ...