During a crisis of confidence, announcements of deposit guarantees may give market participants short-term confort. But stock market responses show that using public funds for bank bailouts is not a credible way to restore the health of the financial sector

Thailand's economic crisis in 1997 was fundamentally one of private sector debt, rooted in private behavior that affected the magnitude and composition of investment and how it was financed. Thailand's crisis provides further evidence that financial liberalization must be carefully managed...

"Claessens, Klingebiel, and Laeven analyze the role of institutions in resolving systemic banking crises for a broad sample of countries. Banking crises are fiscally costly, especially when policies like substantial liquidity support, explicit government guarantees on financial institutions'...