The financial system in Cyprus is many times the size of the nation’s economy. The same was true for Ireland and Iceland. Each ended in crisis. Does size matter?
Supersized financial systems are the elephant in the boat when they become five to 10 times larger than the economy in which they operate. Can such arrangements be made to work, or are they structurally doomed? Wharton management professor Mauro Guillen says that without the right rules in place, such countries are skating on thin ice.
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