This paper analyzes the Asian crisis in the context of past and present financial crises to provide a model of asset price bubbles and ensuing crisis in developing and other economies. It is argued that financial structure matters for economic growth but is not that important for preventing...

In a model with bankruptcy costs and segmented deposit and equity markets, we endogenize the cost of equity and deposit finance for banks. Despite risk neutrality, equity capital earns a higher expected return than direct investment in risky assets. Banks hold positive capital to reduce...