 An additional effect of sudden stops and third generation crises in emerging markets are related to financial institutions and sudden stops in short term capital inflows, in comparison to previous crises where the main features were related to fiscal imbalances or weakness in real activity.In this type of model, international financial markets play a key role, where small open economies face a problem of international illiquidity during the crisis episodes, associated with the collapse of the financial system.Due to the inherent structure of the banking system, banks transform maturity from liquid deposits to illiquid assets, which creates vulnerability to bank runs.