Friday, October 26, 2012

Graph of the Day: Frequency of Banking Crises

The graph below, from Alan Taylor's recent paper shows the frequency of banking crises around the world.

As you can see in between the Great Depression in the 1930s and the 1980s, with the beggining of financial deregulation there are NO banking crisis. As Taylor (p. 2) notes: "none [banking crises] at all occurred from World War 2 until the 1970s."That's how effective the regulation of the 1930s and the capital controls of the Bretton Woods era were.

PS: Any similarity with the graph on income inequality, that decreases after the Great Depression and grows after Reagan too, is NOT a coincidence.

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