The Evidence and Impact of Financial Globalization

Chapter 36

Empirical Literature on Financial CrisesFundamentals vs. Panic

I. Goldstein

University of Pennsylvania, Philadelphia, PA, USA

Outline

Introduction

Empirical Evidence on the Role of Fundamentals

Banking Crises

Currency Crises and Twin Crises

Contagion

What do we Learn from the Evidence about the Role of Panic?

How can we Test for Panic?

Conclusion

Acknowledgments

Glossary

References

Introduction

The process of financial globalization has given rise to an increase in the frequency of financial crises.¹ With it, there has also been a surge in research about financial crises. One of the key questions in this area is whether crises are triggered by fundamentals or come as a result of panic. Observing real-world events, many prominent researchers, ...