Stage Three of a financial crisis in an emerging market economy features

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Stage Three of a financial crisis in an emerging market economy is characterized by a full-fledged financial crisis, with mass default on loans, a sharp decline in asset prices, and a severe contraction in economic activity. Inflation may increase, but it is not the defining characteristic of this stage. Debt deflation and an increase in general price levels may occur, but they are not specific to Stage Three.

Stage Three of a Financial Crisis in an Emerging Market