This relatively simple model attempts to capture and integrate four widely held views about financial crises. [1] Interconnectedness among financial institutions (banks) can play a major role in precipitating systemic financial crises. [2] Lack of information about the quality of bank portfolios...

Financial risks outside of the traditional banking sector can quickly spread throughout financial systems and lead to disruptions in the real economy. A lack of adequately detailed financial sector statistics can obscure buildups of risks from policymakers and hinder their ability to effectively...