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Banking Crises

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Banking Crises

CESifo Group Munich,

5 mins. de lectura
5 ideas fundamentales
Audio y Texto

¿De qué se trata?

Economic booms and busts have historically driven banking crises.

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Editorial Rating

7

Qualities

  • Overview
  • Background

Recommendation

Banking crises have always been a part of the economic scene. These crunches typically follow economic booms that go bust, much as the 2008 banking crisis succeeded the US housing market collapse. Professor Richard S. Grossman offers a succinct history of banking crises during the past 200 years, noting the conditions necessary for bank stability. getAbstract recommends his informative report to bankers, investors and economic history buffs.

Summary

Numerous banking crises have occurred across the globe over a period spanning more than 200 years. Although each may have had a unique trigger, these crises represent a systemic failure stemming from the collapses of one or more major banks. These financial disasters can devastate economies, with all stakeholders – bank owners and creditors, financial markets, and taxpayers – bearing the costs. An inherent tension exists between a bank’s requirement to hold cash to meet depositor demands and its need to get a better return by investing in yield-producing assets. Banks’ greed for yield often drives them to invest in assets...

About the Author

Richard S. Grossman is a professor of economics at Wesleyan University in Connecticut.

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