Banks matter for economic growth, for poverty alleviation, for income distribution and for human welfare as a whole. And banks matter when they fail. According to Ross Levine (2005), the fiscal costs of banking crises in developing countries since 1980 have exceeded $1 trillion, and some...

This chapter of the forthcoming Oxford Handbook of Financial Regulation considers, in broad historical perspective and also with respect to the global financial crisis, why financial systems are crisis-prone and the relationship between financial crises and regulation. It begins with an overview...