Financial crises in recent years

There have been quite a few.

Risks for balance sheet weaknesses include maturity, currency, capital structure, solvency risks.   Balance sheet mismatches create vulnerabilities that lead directly to solvency risk.

Govt. sector- assets minus liabilities = net worth

Financial sector- assets minus liabilities = net worth

Private sector- assets minus liabilities = net worth

Analyzing these risks can help to shed light on crises in:

Mexico(1994), Thailand(1997), Indonesia(1997), Korea(1997), Russia(1998), Brazil(1999), Turkey(2001), Argentina(2002), Uruguay(2002), United States(2009)

Balance Sheet Approach to Financial Crises‘, Roubini, Setser, et al, IMF Working Paper, Dec. 2002

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