Banking Crises’ Triggering Factors – Lessons from Past Experience

Maintaining robustness and stability of a financial system, independent of the degree of development of a specific country, has always constituted a matter of concern for decision makers. At present, this concern has transcended national borders, as financial markets have become increasingly integrated and any adverse shock affecting one country’s financial system could have potential spillover effects to others. In this paper we propose a theoretical analysis of the triggers of the current global financial turmoil, in order to ascertain if there is a recurrent pattern with the past crisis episodes. To achieve this goal, we have first summarized the characteristics and root causes of past crisis episodes, with emphasis on banking crises. The last part of the paper explores the extent to which the current financial crisis is connected with the past crisis episodes.