This paper examines the links between banking and balance-of-payments crises, analyzing episodes in 20 countries from 1970 to mid-1995. It finds that banking crises often precede balance-of-payments crises, but the reverse is not true. Financial liberalization typically precedes banking crises and helps predict them. The paper suggests that macroeconomic factors, rather than a direct causal link between banking and balance-of-payments crises, are the common cause. It also finds that financial liberalization is a significant predictor of banking crises but not of balance-of-payments crises. The paper highlights that balance-of-payments crises are often preceded by real exchange rate appreciation, terms of trade deterioration, and falling foreign exchange reserves. Banking crises are often preceded by credit booms, real exchange rate appreciation, and economic contractions. The paper also notes that crises are often linked to external factors such as interest rates and contagion effects. The study concludes that understanding the macroeconomic background of crises is crucial for predicting and managing them.This paper examines the links between banking and balance-of-payments crises, analyzing episodes in 20 countries from 1970 to mid-1995. It finds that banking crises often precede balance-of-payments crises, but the reverse is not true. Financial liberalization typically precedes banking crises and helps predict them. The paper suggests that macroeconomic factors, rather than a direct causal link between banking and balance-of-payments crises, are the common cause. It also finds that financial liberalization is a significant predictor of banking crises but not of balance-of-payments crises. The paper highlights that balance-of-payments crises are often preceded by real exchange rate appreciation, terms of trade deterioration, and falling foreign exchange reserves. Banking crises are often preceded by credit booms, real exchange rate appreciation, and economic contractions. The paper also notes that crises are often linked to external factors such as interest rates and contagion effects. The study concludes that understanding the macroeconomic background of crises is crucial for predicting and managing them.