Chapter 7 International Lending and Financial Crises

[teaching targets and demands]   To make students master the development of international lending to developing countries and the formative causes, characteristics and harms of international financial crisis.

[Teaching key and difficult points] The formative causes, characteristics and harms of international financial crisis.

[Content of courses ] Gains and losses from well-behaved international lending;    Taxes on international lending; International lending to developing countries; Financial crisis: What can and does go wrong?    Resolving financial crises; Reducing the frequency of financial crises.

International Financial Crises: Sources of What Goes Wrong Overlending and overborrowing Exogenous negative international shocks Excessive exposure to exchange rate risk Volatile international short-term lending Contagion

Combating Financial Crises Resolving crises after they have occurred Rescue packages Debt restructuring Making crises less likely to occur Sound macroeconomic policies Timely and accurate data reports Avoiding short-term borrowing denominated in foreign currencies Better regulation and supervision of banks Controversial Exchange rate policy Role of IMF Use of capital controls