This article explores the effect of delays in updating prudential regulation on countries' likelihood of experiencing … banking crises, and it disentangles the impact of different aspects of regulation on crisis onset. I argue that delays in … revising banks' prudential regulation allow banks to adopt risky behavior. This increases a country's vulnerability to systemic …

of a financial crisis: 1) Regulation creates two categories of financial institutions. The first class faces greater … subsidized funds to make riskier investments (including investments in the second class) without regulation compensating for …