This paper examines currency crashes in emerging markets using a panel of annual data for over one hundred developing countries from 1971 through 1992. The authors define a currency crash as a depreciation of the nominal exchange rate of at least 25 percent that is also at least a 10 percent increase in the rate of nominal depreciation. They analyze various factors, including the composition of debt, macroeconomic indicators, external variables, and foreign interest rates. The study finds that factors such as output growth, the rate of change of domestic credit, and foreign interest rates are significantly related to crash incidence. A low ratio of FDI to debt is consistently associated with a high likelihood of a crash. The paper defines a currency crash as a decrease in the value of the local currency of at least 25 percent. It uses the percentage change in the natural logarithm of the nominal bilateral dollar exchange rate to measure the exchange rate. The study also considers the impact of high inflation countries and the need to account for changes in exchange rates over time. The authors examine six variables relevant to the speculative attack literature, including the rate of growth of domestic credit, the government budget as a fraction of GDP, the ratio of reserves to imports, the current account as a percentage of GDP, the growth rate of real output, and the degree of over-valuation. The study also looks at external variables, including the ratio of debt to GNP, the ratio of foreign exchange reserves to monthly imports, the ratio of the current account to GDP, and the real exchange rate. The composition of the debt is also examined, including the ratio of FDI to debt, the fraction of debt which is concessional, the fraction that comes from multilateral development banks, and the maturity structure of the debt. The authors find that FDI is a safer way to finance investment than portfolio investment and that the composition of capital inflows is an important factor in determining the likelihood of a currency crash. The study also considers foreign variables, including short-term Northern interest rates and real OECD output growth. The authors use a multivariate model to estimate the effects of various variables on the likelihood of a currency crash. They find that higher debt, lower reserves, and a more over-valued real exchange rate all seem to raise the odds of crash incidence. Increases in Northern interest rates increase the likelihood of a crash by an amount which is both statistically and economically significant. The study concludes that currency crashes can be characterized in what appears to be a sensible way, and that they tend to occur when FDI inflows dry up, when reserves are low, when domestic credit growth is high, when Northern interest rates rise, and when the real exchange rate has been over-valued.This paper examines currency crashes in emerging markets using a panel of annual data for over one hundred developing countries from 1971 through 1992. The authors define a currency crash as a depreciation of the nominal exchange rate of at least 25 percent that is also at least a 10 percent increase in the rate of nominal depreciation. They analyze various factors, including the composition of debt, macroeconomic indicators, external variables, and foreign interest rates. The study finds that factors such as output growth, the rate of change of domestic credit, and foreign interest rates are significantly related to crash incidence. A low ratio of FDI to debt is consistently associated with a high likelihood of a crash. The paper defines a currency crash as a decrease in the value of the local currency of at least 25 percent. It uses the percentage change in the natural logarithm of the nominal bilateral dollar exchange rate to measure the exchange rate. The study also considers the impact of high inflation countries and the need to account for changes in exchange rates over time. The authors examine six variables relevant to the speculative attack literature, including the rate of growth of domestic credit, the government budget as a fraction of GDP, the ratio of reserves to imports, the current account as a percentage of GDP, the growth rate of real output, and the degree of over-valuation. The study also looks at external variables, including the ratio of debt to GNP, the ratio of foreign exchange reserves to monthly imports, the ratio of the current account to GDP, and the real exchange rate. The composition of the debt is also examined, including the ratio of FDI to debt, the fraction of debt which is concessional, the fraction that comes from multilateral development banks, and the maturity structure of the debt. The authors find that FDI is a safer way to finance investment than portfolio investment and that the composition of capital inflows is an important factor in determining the likelihood of a currency crash. The study also considers foreign variables, including short-term Northern interest rates and real OECD output growth. The authors use a multivariate model to estimate the effects of various variables on the likelihood of a currency crash. They find that higher debt, lower reserves, and a more over-valued real exchange rate all seem to raise the odds of crash incidence. Increases in Northern interest rates increase the likelihood of a crash by an amount which is both statistically and economically significant. The study concludes that currency crashes can be characterized in what appears to be a sensible way, and that they tend to occur when FDI inflows dry up, when reserves are low, when domestic credit growth is high, when Northern interest rates rise, and when the real exchange rate has been over-valued.