Of the many countries that suffered exchange rate crises in the 1990s, Brazil and Korea recovered most rapidly. This article analyzes the Brazilian recovery. William Gruben and John Welch focus on the freedom that Brazilian bank health gave to the central bank to pursue a postcrisis monetary...

Among the countries that were impacted by the 1997 Asian crisis, South Korea (Korea hereafter) has demonstrated the fastest recovery by blocking its downward spiral. Jahyeong Koo and Sherry Kiser examine the recovery process of financial crises, particularly in Korea, in light of the...

Cara S. Lown explores the banking industry's role in the economy and finds evidence supporting the idea that fluctuations in bank credit are related to fluctuations in economic activity. She also finds that bank asset holdings adjust before changes in economic activity and that the banking...

This article provides evidence consistent with recent policy proposals calling for a greater role for market forces in promoting a safe and sound financial system. The authors' empirical results indicate a measure of expected default probability distilled from equity prices helps predict the...

In this article, Stephen Prowse investigates how owners of commercial banks encourage management to follow value-maximizing policies. While the "corporate control mechanism" in nonfinancial firms is well documented, for the banking industry much less evidence is available. Moreover, unique...

Since the 2007-08 crisis, banks in many countries have been facing what seems to be a serious “trust crisis”. This sharp decline in trust in banks and banking, the likely outcome of the near-collapse of banking systems during the crisis, is partly captured by a growing empirical literature....