ebook9783319017570d4325

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Bank panics have always mattered because they create serious disruptions in economic and financial activity, depressing national economies.¬† But they matter even more now, as information and communications technologies have stitched together a global financial system that is more vulnerable to crisis on a large scale. For example, the global bank panic of 2007-08 froze up the national economies of the U.S., England, France, Iceland, Ireland, and Germany — all at the same time.¬† And each of their governments had to act to bail out their own banks, without a consistent international regulatory framework. In this volume, Fred Betz takes a unique, cross-disciplinary approach to understanding bank panics, with an emphasis on the U.S. Bank Panics of 1857, 1907, 1930-33, 2007-08 and the European Bank Panics of 2010-2013.¬† Despite over a hundred years of modern economic theory and many excellent historical studies about bank panics, they are still poorly understood and certainly not yet preventable.¬† Partly this has been a function of the limitations of modern economic theory, which cannot interpret bank panics as complex societal phenomena.¬†¬† All societal phenomena are, in reality, multi-disciplinary in scope and cross-disciplinary in connections.¬† Bank panics can best be understood through the collective lenses of sociology, political science, psychology, management science, management of technology, among other disciplines.¬† Through this dynamic approach, the author identifies five key underlying triggers of bank panics:¬†(1) funding excessive leverage in speculation, (2) lack of proper banking regulation, (3) bad banking practices, (4) lack of banking integrity, (5) corrupt banking practices.¬† In so doing, he suggests new strategies for avoiding and recovering from bank panics and other financial crises.