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Figure of the Month

Financial crises in advanced economies, 1870-2015

Note: Number of countries experiencing a systemic banking crisis in a given year. The 17 countries included are Australia, Belgium, Canada, Denmark, France, Finland, Germany, Italy, Japan, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK and USA.

Source: Ò. Jordà, M. Schularick, A.M. Taylor: Macrofinancial history and the new business cycle facts, in: NBER Macroeconomics Annual, Vol. 31, No. 1, 2017, pp. 213-263.

This figure from Moritz Schularick and Kaspar Zimmermann's article Towards a New Paradigm: Stabilising Financial Markets shows the frequency of financial crises in 17 advanced economies between 1870 and 2015. Evidence shows that larger and more complete financial markets have not led to a reduction in the incidence of financial crises. On the contrary, systemic risk is back. While relatively common between 1870 and 1930, financial crises were not a regular concern for the post-World War II generation, when finance was kept on a short leash. As financial markets were progressively liberalised in the 1970s, financial stability concerns made a comeback.