Banking crises hit hardest on sectors dependent on external financing.
Banking crises can hurt the economy by causing a drop in credit and growth. The impact is not just because crises happen during bad times, but because banking problems independently harm the economy. Sectors needing more outside money suffer more during banking crises. This is especially true in developing countries with limited access to foreign finance and severe banking crises. Small firms, which rely more on banks, also struggle more during these crises.