crisis of October 2008, when all three major banks in Iceland collapsed in three successive days. The country is still … of Iceland (CBI) saw the systemic risks created by lending to owners and related parties, which increased greatly from … countries had the resources to bail out their irresponsible and illiquid banks, Iceland did not, and it received little foreign …

system and its role in the real economy. The best examples of the causal link between excessive debt, asset bubbles, and …

. There is no uncertainty about economic fundamentals. Banking bubbles can emerge through a positive feedback loop mechanism …. Changes in household confidence can cause the collapse of bubbles, resulting in a financial crisis. Credit policy can mitigate … economic downturns but also incur an efficiency loss. Bank capital requirements can prevent the formation of banking bubbles by …