We study the effects of stock market volatility on risk-taking and financial crises by constructing a cross-country database spanning up to 211 years and 60 countries. Prolonged periods of low volatility have strong in-sample and out-of-sample predictive power over the incidence of banking...

"Finance brings prosperity and danger. We use measurements of risk to try and control the dangers of investments while maximizing our growth. Current strategies rely on mathematical techniques and historical data to predict future risk, but ignore the human component, failing to take into...