Banking crises have occurred throughout the world. What similarities do we find when we
look at the different countries?
Answer: Financial deregulation with inadequate supervision can lead to increased moral hazard
as banks take on more risk. Although deposit insurance was not necessarily a major factor in
every country's bank crisis, there was always some kind of government safety net. The presence
of the government safety net also leads to increased risk-taking from the banks.
Diff: 1 Type: SA Page Ref: 10.1A- 1 - 6
Topic: Questions for Web Appendix on the Banking Crises Throughout the World
Skill: Recall
Objective List: Appendix: Banking Crises Throughout the World
