A model of the domestic financial intermediation of foreign capital inflows based on agency costs is developed for studying financial crises in emerging markets. In equilibrium, the banking system becomes progressively more fragile under imperfect prudential regulation and public sector loan...

The recent financial crises in emerging markets have motivated a number of proposed measures that might regulate or provide protection against readily reversible external capital flows. Possible reforms include the adoption of self-protection policies by developing countries that augment...

We contribute to the literature on the international transmission of balance sheet shocks that pummeled the banks of the industrialized countries in 2008 and 2009. We examine over time bank level data on over 21,000 banks located around the world. Our identification strategy relies on the...