Financial crises are inevitable, but bank closures are not. When a crisis strikes, careful attention to the liquidity of a bank—and, if necessary, the assistance of a central bank—can prevent it from failing. Whether the crisis was the result of poor management or of macroeconomic conditions, a successful turnaround depends on using well-known but frequently ignored management skills to restore confidence as conditions improve.

Article at a glance: The take-away: Manage the bank’s liquidity Stop making risky new loans.....