We investigate asset returns around banking crises in 44 advanced and emerging economies from 1960 to 2016. In contrast to the view that buying assets during banking crises is a profitable long-run strategy, we find that returns of equity and other asset classes often underperform following banking crises. This underperformance is particularly pronounced for bank stocks. The collapse in equity prices during crises is followed by lower dividends rather than a bounce back in prices, suggesting that the collapse is primarily driven by real damage to earnings and balance sheets, rather than temporary investor leverage constraints or illiquidity. Long-run returns and dividends can be predicted at the time of the crisis with debt-overhang-related measures. Our findings suggest that, even during the acute phase of banking crises, equity investors do not fully recognize the extent of bad loans made by banks and the long-term real consequences of crises.