Real estate bubbles may occur without banking crises. And banking crises may occur without real estate bubbles. But the two phenomena are correlated in a remarkable number of instances ranging over a wide variety of institutional arrangements, in both advanced industrial nations and emerging economies. The consequences for the real economy depend on the role of banks in the country’s financial system. In the US, where banks hold only about 22% of total assets, most borrowers can find substitutes for bank loans and the impact on the general level of economic activity is relatively slight. But in countries where banks play a more dominant role, such as the US before the Great Depression (where banks held 65% of total assets), present-day Japan (where banks hold 79% of total assets), or emerging markets (where banks often hold well over 80% of total assets), the consequences for the real economy can be much more severe. (BIS, 1995).