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Preventing Banking Crises in the Future

July 1, 1997

Explains why countries large and small, developed and developing, free market and planned, democratic and authoritarian, western and eastern, northern and southern, have experienced serious banking problems.

Sign saying bank branch closed.

George G. Kaufman, John F. Smith Professor of Finance and Economics at Loyola University Chicago, attempts to explain in this article for the Summer 1997 issue of Independent Review why countries large and small, developed and developing, free market and planned, democratic and authoritarian, western and eastern, northern and southern, have experienced serious banking problems. He notes,

"My analysis of the causes of the banking debacles suggests that a number of causes are common to all countries regardless of their type of banking system or economic structure. Moreover, the commonality spills over to the strategies initially employed by the governments to solve the problem, albeit with little if any success. Thus, we can learn much from the mistakes of the past."

Author
George Kaufman was the John F. Smith, Jr. Professor of Finance and Economics at the Quinlan School of Business at Loyola University (Chicago) and was a policy advisor to The Heartland Institute.