This chapter examines recent experiences with banking crises in seven countries—Argentina, Chile, Malaysia, Philippines, Spain, Thailand, and Uruguay—focusing on the linkages between macroeconomic conditions, financial sector reforms and financial crisis, and the range and effectiveness of measures to deal with financial crises.1
In March 1980, one of the largest private banks in Argentina—Banco de Intercambio Regional (BIR)—failed; within a few days, the Central Bank had to intervene three other major banks, two of which were subsequently liquidated.2 Thus began a serious crisis of the Argentine financial system, which resulted in the liquidation of 71 financial institutions over the next two years and caused far-reaching changes not only in the financial system but also in economic policies. The restructuring process is still continuing. Most of the authors who have analyzed these developments have concentrated on the broad macroeconomic aspects; a few others have dealt with selected features of the Argentine financial sector in the context of the crisis. This chapter integrates these two sets of analyses and focuses more closely on the financial sector by emphasizing the regulatory aspects that previous studies have largely ignored.