Introduction

This innovative analysis investigates a complex issue of tremendous economic and political importance: what makes some countries vulnerable to banking crises, while others emerge unscathed? Banks on the Brink explains why some countries are more vulnerable to banking crises than others.

Key Variables

Copelovitch and Singer highlight the effects of two variables in combination: foreign capital inflows and the relative prominence of securities markets in the domestic financial system. Foreign capital is the fuel for banks'' potentially dangerous behavior, and banks are more likely to take on excessive risks when operating in a financial system with large securities markets.

Data and Case Studies

The book analyzes over thirty years of data and provides historical case studies of two key countries, Canada and Germany, each of which explores how political decisions in the 19th and early-20th centuries continue to affect financial stability today.

Policy Implications

The analyses in this book have crucial policy implications, identifying potential regulations and policies that can work to protect banking systems against future crises.