Restructuring of the banking sector has been a major topic in Japan for at least a decade now. It is also a major and recurring topic for many policymakers in both the developed world and among developing countries. This paper examines the implications of post-crisis banking sector restructuring for economic growth. First, a relevant feature of banking activity is analyzed in a basic framework linking bank credit to the economy. Using this model, the common causes of banking crises are examined and policies on how to avoid them are suggested. Next, the dynamics of banking crises are examined and how traditional bank restructuring, as also often implemented under the auspices of international organizations, affects them. This includes an analysis of the impact of increased fiscal expenditures as part of bank reforms. Finally, a modified program of banking reform that avoids the problems of traditional policies and which considers macroeconomic stability is proposed.