The chart shows the frequency of financial crises in 17 advanced economies between 1870 and today. While relatively common between 1870 and 1930, financial crises were not a regular concern for the post-World War II generation, when finance was kept on a short leash. As financial markets were progressively liberalised in the 1970s, financial stability concerns made a comeback.
Not only have crises made a comeback, research has also been able to demonstrate their large economic costs to the economy, the political system and the fiscal health of countries. The output costs are large, and governments typically face sizable fiscal costs. Crises also take a toll on political stability. The share of votes going to far right populist parties increases on average by 30% after a systemic banking crisis.