The last 25 years have seen the resurgence of a problem of long historical standing: banking crises. While the general presence of a "banking system safety net" has typically prevented these modern crises from turning into the kinds of banking panics observed historically, they are nonetheless...

In our view, the financial crisis was largely due to wrong incentives affecting the behavior of financial institutions and investors that was set in motion by our government's reluctance to let large financial institutions fail – i.e., the Too Big to Fail (hereafter, TBTF) policy. Also...

This study reviews the causes and evolution of the financial crisis and surveys some of the recent literature on this topic. It documents how bank regulation became essentially ineffective due to the rise of “quasi-banks,” that is, large financial intermediaries that perform banking...