What causes financial system meltdowns in developed countries

Abstract

In recent years, financial stability has been a significant issue all over the world, especially among the developed countries. This thesis summarized the signs before financial system meltdown, polices of Developed countries on how to respond to them of the historical literature. Furthermore, this thesis used the sample data of nine representative countries (America, Germany, UK, France, Denmark, Belgium, Singapore, South Korea, and Australia) in past ten years to analysis the influence of different factors in Financial Soundness Indicators of financial stability, which is evaluated by Bank Z-Score. Data analysis’s result also provide a new evidence that a higher proportion non-performance loans may be a sign of financial development driven by foreign investment. This empirical study also confirmed the impact degree of factors in Financial Soundness Indicators on financial stability.