| The aim of this paper is to understand financial crises phenomenon by reviewing its literature. The development of the literature from first through third-generation models is critically reviewed. First generation models are developed to respond to the sovereign debt crises of Latin America in the 1980s; second-generation models to the European Monetary System's exchange rate mechanism (ERM) crisis (1992-1993); and third-generation models to the Asian crisis (1997-1998). The three generations analytical models are devoted to analyzing the causes of financial crises. |