Financial Crisis in the Banking Sector: Past and Present

Is it possible to predict global financial crises before they occur?  Economic models rarely predict financial catastrophes, suggesting that there is something fundamental to financial behaviour that is being missed.  Recent events suggest that the world, once again, is on the verge of a major tipping point requiring a new approach if future financial crises are to be avoided.  This work package focuses on the underlying socioeconomic processes and systems, that when influenced in a particular way, could lead to economic downfall.  Historical analyses provide the context in which financial risks first occur and provide insight into how and why financial crises happen.  

This work package will consider the following:

• The 1866 banking crisis
• The period of financial crises between 1929 and 1931
• The 2007-2008 banking crisis

Interdisciplinary research, involving both historians and financial analysts, will investigate the stability of the banking system during the above time periods including the role of government and the Bank of England during each respective financial crisis.  This work package will compare and contrast current and historical events through the lenses of finance and governance history.  It will build a detailed understanding of the workings of the systems that are part of these crises, comparing the evidence with both metaphorical and formal mathematical definitions of 'tipping points'.

Researchers

Leaders: Professor Ranald Michie (History) and Professor Roman Tomasic (Law)

Research Associates: Dr Folarin Akinbami (Law) and Dr Simon Mollan (History)

Additional Researchers: Professors Philip Williamson (History) and Paul Ormerod (Volterra Consulting)

Resources

Podcasts

• Banking crises and financial legislation Part 1 (last modified: 28 April 2011) - MP3 file
• Banking crises and financial legislation Part 2 (last modified: 18 July 2011) - MP3 file

Research Brief

• 3 Restoring Trust in Order to Increase Market Resilience (last modified: 1 February 2013)

Leaflet

• Financial Crisis in the Banking Sector: Past and Present Leaflet (last modified: 5 May 2011)

Video

Financial Crises: The Need to Learn from History

Views: 279

Prof Roman Tomasic and Dr Folarin Akinbami discuss how we must learn from past financial crises and address the problem of 'moral hazard', where financial companies and individuals make irresponsible decisions and externalise the consequences of their actions onto others.