Briefly describe the sequence of events in emerging-market financial crises.
 

1 Sequence Economies-Market Financial Crises FIGURE STAGE ONE Initiation of Financial Crisis Deterioration in Financial Institutions' Balance Sheets STAGE TWO Currency Crisis Fiscal Imbalances STAGE THREE Full-Fledged Financial Crisis Increase in Interest Rates Asset Price Decline Adverse Selection and Moral Hazard Problems Worsen Foreign Exchange Crisis Adverse Selection and Moral Hazard Problems Worsen Economic Activity Declines Banking Crisis Adverse Selection and Moral Hazard Problems Worsen Economic Activity Declines Factors Causing Financial Crises of Events in Increase in Uncertainty | Consequences of Changes in Factors