Sebastjan Strasek, Timotej Jagric, Nataša Špes, Vita Jagric
Financial Crises: how to handle them?
Journal of European Economy, Volume 6, Issue 1, March 2007, pp.76-88
|JEL: G15, G18||Full text (PDF)|
Recent financial crises illustrate the risks of financial volatility and macroeconomic instability in the process of economic growth and development. The paper examines the determinants of financial crises in emerging markets, the causes behind vulnerability to crises and the appropriateness of various policy responses. We find that the financial crises of 1990s demonstrated the strong nexus between a sound financial system and the performance of the underlying economy. The need for emerging market countries to continue developing the instruments and infrastructure of the capital markets was clearly demonstrated. In this paper we take stock of the policy lessons which can reduce the probability of future crises and limit their effects.