Financial crises is experienced in many developing countries for the last two decades. Financial crises can be seen in two formsibanking crises and currency crises. This study is especially focused on banking crises. The financial crises is defined by using the moral hazard and adverse selection problems. Sources of banking crises are explained by macroeconomic and microeconomic reasons. Macroeconomic instability is the principal source of banking crises. Supervision, inadequate infrastructure, liberalisation, deregulation, government intervence, moral hazard and lack of tamsparency are the microeconomic sources of banking crises. Financial repression might be enhance banking crises in some developing countries.