2  BIS Review 165/2009  endogenous unravelling of the credit boom, which then adversely affects many intermediaries and markets at the same time. 4 Third, negative aggregate shocks can adversely affect intermediaries and markets simultaneously. Historical research has shown that many banking crises were related to economic downturns. 5 Note that the three mechanisms can happen independently or they can reinforce each other.
There are a number of features of financial systems that make them particularly prone to these forms of systemic risk. Let me just highlight three key ones. The first pervasive feature of financial systems is what we call externalities. They particularly relate to the complex and dynamic network of exposures among major intermediaries.