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The term '''financial crisis''' refers to a variety of [[crisis|situations]] in which some financial institutions or assets suddenly lose a large part of their value.{{Fact|Took over the core from Wikipedia, seems like a good common-sense definition, but lacking an actual source for it, hence the tag.}}

They include [[sovereign default]]s, which occur when a government fails to meet payments on its external or domestic debt obligations or both. Then there are banking crises, typically when a significant part of a banking sector has become insolvent after heavy [[investment]] losses, [[banking panic]]s, or both. Another important class of crises consists of [[exchange rate]] crises, where the value of a country’s currency falls precipitously, often despite a government "guarantee" that it will not allow this to happen under any circumstances. Some crises are marked by bouts of very high [[inflation]]. These separate types of crisis often occur in clusters.<ref name="Reinhart_Time">Carmen M. Reinhart & Kenneth S. Rogoff. [http://press.princeton.edu/chapters/p8973.pdf This Time Is Different: Eight Centuries of Financial Folly] (pdf), ''Preface'', see also the [http://press.princeton.edu/titles/8973.html summary page]. Referenced 2011-01-08.</ref>

==Properties==
[[Carmen Reinhart]] and [[Kenneth Rogoff]] argue, that systemic banking crises are typically preceded by asset price bubbles, large capital inflows and credit booms.

Banking crises dramatically weaken fiscal positions of governments, with revenues invariably contracting, and fiscal expenditures often expanding sharply. Three years after a financial crisis central government debt increases, on average, by about 86 percent. The fiscal burden of banking crisis extends far beyond the commonly cited cost of the bailouts. The busts of real estate price bubbles average four to six years.<ref name="Reinhart_Equal">Carmen M. Reinhart and Kenneth S. Rogoff. [http://www.economics.harvard.edu/files/faculty/51_Banking_Crises.pdf "Banking Crises: An Equal Opportunity Menace"], December 17, 2008. Referenced 2011-02-23.</ref>

==History==

===Before 19th century===
The first true international debt crisis had its roots in loans made by Italian merchants to England starting in the late 13th century. Italian loans helped to finance a long [[Hundred Years' War|series of wars]] between England and France. Edward III of England defaulted in 1340 after a series of military defeats and a bank run hit Florence's economy. The whole affair played out in slow motion by modern standards. One major Italian lender, the Peruzzi Bank, went bankrupt in 1343, and another, the Bardi Bank, did in 1346.<ref name="Reinhart_Different">Carmen M. Reinhart and Kenneth S. Rogoff. [http://press.princeton.edu/titles/8973.html "This Time is Different"], ''Princeton University Press'', ISBN 978-0-691-14216-6, p.69-70. Referenced 2011-07-11.</ref>

* [[Great Bullion Famine]] in the fifteenth-century Europe, with a particular lack of [[silver]]
* [[The crash of 1557-1560]], that occurred when Spain and France defaulted in short order
* [[Tulip mania]] (1634-37) in the Netherlands
* [[Panic of 1640]] in Massachusets
* 1720: Bursting of [[South Sea Bubble]] (Great Britain) and [[Mississippi Bubble]] (France) – earliest of modern financial crises; in both cases the company assumed the national debt of the country (80–85% in Great Britain, 100% in France{{Fact}}), and thereupon the bubble burst.
* [[Crisis of 1772]]
* [[Panic of 1792]]
* [[Panic of 1796–1797]]

===19th century===
* [[Danish state bankruptcy of 1813]]
* [[Panic of 1819]] – pervasive USA economic recession with bank failures; culmination of U.S.'s 1st boom-to-bust economic cycle
* [[Panic of 1825]] – pervasive British economic recession in which many British banks failed, and [[Bank of England]] nearly failed
* [[Panic of 1837]] – pervasive USA economic recession with bank failures; a 5 yr ''depression'' ensued
* [[Panic of 1847]] - a collapse of British financial markets associated with the end of the 1840s [[railroad]] boom.
* [[Panic of 1857]] – pervasive USA economic recession with bank failures
* [[Panic of 1866]] – the 'Overend Gurney crisis' (primarily British and Italian)
* [[Panic of 1873]] – pervasive USA economic recession with bank failures, known then as the 5 year ''Great Depression'' and now as the [[Long Depression]]
* [[Panic of 1884]] - was a minor crisis in the United States and France
* [[Panic of 1890]]
* [[Panic of 1893]] – a panic in the United States marked by the collapse of railroad overbuilding and shaky railroad financing which set off a series of bank failures
* [[Australian banking crisis of 1893]]
* [[Panic of 1896]] - an acute [[Recession|economic depression]] in the [[United States]] precipitated by a drop in [[free silver|silver reserve]]s and market concerns on the effects it would have on the [[gold standard]]

===20th century===
* [[Panic of 1901]] – limited to crashing of the New York Stock Exchange
* [[Panic of 1907]] – pervasive USA economic recession w/ bank failures
* [[Panic of 1910–1911]]
* 1910 – [[Shanghai rubber stock market crisis]]
* [[Depression of 1920–21]]
* [[Japanese Shōwa Financial Crisis of 1927]]
* [[Wall Street Crash of 1929]], followed by the [[Great Depression]] – the largest and most important economic depression in the 20th century
* 1973 – [[1973 oil crisis]] – oil prices soared, causing the [[1973–1974 stock market crash]]
* [[Secondary banking crisis of 1973–1975]] – United Kingdom
* 1980s – [[Latin American debt crisis]] – beginning in Mexico in 1982
* [[Israeli bank crisis of 1983|Bank stock crisis (Israel 1983)]]
* 1987 – [[Black Monday (1987)]] – the largest one-day percentage decline in stock market history
* 1989–91 – [[Savings and loan crisis|United States Savings & Loan crisis]]
* 1990 – [[Japanese asset price bubble]] collapsed
* early 1990s – Scandinavian banking crisis: [[Swedish banking crisis]], [[Finnish banking crisis of 1990s]]
* 1992–93 – [[Black Wednesday]] – speculative attacks on currencies in the [[European Exchange Rate Mechanism]]
* 1994–95 – [[1994 economic crisis in Mexico]] – speculative attack and default on Mexican debt
* 1997–98 – [[1997 Asian Financial Crisis]] – devaluations and banking crises across Asia
* [[1998 Russian financial crisis]]

=== 21st century ===
* 2001 – The [[dot-com bubble]] – speculations concerning internet companies crashed
* 2007–10 – The [[Great Recession]], and the [[2010 European sovereign debt crisis]]

==See also==
* [[Austrian predictions]]

==References==
{{Reflist}}
*{{citation |last=Atwell |first=William |year=1998 |contribution=Ming China and the emerging world economy, c. 1470–1650 |editors=Twitchett, Denis and Mote, Frederick W. (eds.) |title=The Cambridge History of China: Volume 8: The Ming Dynasty: 1368–1644 |pages=376–416 |location=Cambridge |publisher=Cambridge University Press |isbn=0521243335}}

==Links==
* [http://www.tomwoods.com/panics Economic Cycles Before the Fed] collection of resources by [[Thomas Woods|Tom Woods]]
* [http://mises.org/journals/scholar/thornton6.pdf Who Predicted the Bubble? Who Predicted the Crash?] (pdf) by Mark Thornton
* [http://mises.org/journals/scholar/oberholster.pdf When Debt comes calling] (pdf) by Sarel Oberholster
* [http://mises.org/daily/1070 New Technology, Old Scam] by Clifford F. Thies, October 2002
* [[Wikipedia:Financial crisis|Financial crisis]] on Wikipedia

[[Category:Economic concepts]]
[[Category:Financial crises]]