... is Different" from Barron's (12/22/97) Contagion is, however, not a new phenomenon as the spread of financial turmoil stemming from the Wall Street Crash crossed the globe in the 1930s well illustrates. This essay looks at the channels through which financial crises are transmitted across countries and at whether there is anything that can be done by regulators to mitigate or prevent a country's vulnerability to externally originated shocks and crises. Definition of 'Financial Crisis' Mishkin (1996) defines a financial crisis as a disruption to financial markets in which adverse selection and moral hazard become much worse, so that financial markets are unable to channel funds efficiently to those who have the most productive investment opportunities. An international financial crisis is one where these disturbances and their effects spill over national borders. Three types of crisis can be identified, Stock Market Crashes, Currency Crises and Banking Crises, which can occur singularly and as ...

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