The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Banking Crises

  • Charles W. Calomiris
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2193

Abstract

Banking crises take a variety of forms ranging from temporary liquidity crises to massive insolvencies. They sometimes coincide with other financial crises in currency and sovereign debt markets, and sometimes occur in isolation. These differences reflect the variety of causal influences that give rise to problems for banks. The unusually crisis-prone experience of the United States historically reflected its unique industrial organization of banking. Policies intended to reduce the incidence of banking crises (especially deposit insurance) have instead often increased the risk of crises, as safety-net protection reduces market discipline, allowing banks to undertake imprudent risks.

Keywords

Banking crises Central banks Currency crises Deposit insurance Devaluation Federal Reserve System Great depression Liquidity crises Panic of 1907 Prudential bank regulation Sovereign debt 

JEL Classifications

N2 
This is a preview of subscription content, log in to check access.

Bibliography

  1. Allen, F., and D. Gale. 2004. Financial fragility, liquidity, and asset prices. Journal of the European Economic Association 2: 1015–1048.CrossRefGoogle Scholar
  2. Barth, J.R., G. Caprio, and R. Levine. 2006. Rethinking bank regulation: Till angels govern. Cambridge: Cambridge University Press.Google Scholar
  3. Bernanke, B.S. 1983. Nonmonetary effects of the financial crisis in the propagation of the great depression. American Economic Review 73: 257–276.Google Scholar
  4. Bernanke, B.S., and M. Gertler. 1990. Financial fragility and economic performance. Quarterly Journal of Economics 105: 87–114.CrossRefGoogle Scholar
  5. Bordo, M. 1985. The impact and international transmission of financial crises: Some historical evidence, 1870–1933. Revista di Storia Economica 2(2d): 41–78.Google Scholar
  6. Boyd, J., P. Gomis, S. Kwak, and B. Smith. 2000. A user’s guide to banking crises. Conference paper. Washington, DC: World Bank.Google Scholar
  7. Bruner, R.F., and S.D. Carr. 2007. Money Panic: Lessons from the financial crisis of 1907. New York: Wiley.Google Scholar
  8. Calomiris, C.W. 1990. Is deposit insurance necessary? A historical perspective. Journal of Economic History 50: 283–295.CrossRefGoogle Scholar
  9. Calomiris, C.W. 2000. U.S. bank deregulation in historical perspective. Cambridge: Cambridge University Press.Google Scholar
  10. Calomiris, C.W., and G. Gorton. 1991. The origins of banking panics: Models, facts, and bank regulation. In Financial markets and financial crises, ed. R.G. Hubbard. Chicago: University of Chicago Press.Google Scholar
  11. Calomiris, C.W., and C.M. Kahn. 1991. The role of demandable debt in structuring optimal banking arrangements. American Economic Review 81: 497–513.Google Scholar
  12. Calomiris, C.W., and J.R. Mason. 1997. Contagion and bank failures during the great depression: The June 1932 Chicago banking panic. American Economic Review 87: 863–883.Google Scholar
  13. Calomiris, C.W., and J.R. Mason. 2003a. Fundamentals, panics and bank distress during the depression. American Economic Review 93: 1615–1647.CrossRefGoogle Scholar
  14. Calomiris, C.W., and J.R. Mason. 2003b. Consequences of bank distress during the great depression. American Economic Review 93: 937–947.CrossRefGoogle Scholar
  15. Calomiris, C.W., and L. Schweikart. 1991. The panic of 1857: Origins, transmission, and containment. Journal of Economic History 51: 807–834.CrossRefGoogle Scholar
  16. Calomiris, C.W., and E.N. White. 1994. The origins of federal deposit insurance. In The regulated economy: A historical approach to political economy, ed. C. Goldin and G. Libecap. Chicago: University of Chicago Press.Google Scholar
  17. Calomiris, C.W., and B. Wilson. 2004. Bank capital and portfolio management: The 1930s ‘capital crunch’ and scramble to shed risk. Journal of Business 77: 421–455.CrossRefGoogle Scholar
  18. Caprio, G., and D. Klingebiel. 1996. Bank insolvencies: Cross country experience. Working paper No. 1620. Washington, DC: World Bank.Google Scholar
  19. Cull, R., L. Senbet, and M. Sorge. 2000. Deposit insurance and financial development. Conference paper. Washington, DC: World Bank.Google Scholar
  20. Demirguc-Kunt, A., and E. Detragiache. 2000. Does deposit insurance increase banking system stability? Conference paper. Washington, DC: World Bank.Google Scholar
  21. Demirguc-Kunt, A., and H. Huizinga. 2000. Market discipline and financial safety net design. Conference paper. Washington, DC: World Bank.Google Scholar
  22. Diamond, D., and P. Dybvig. 1983. Bank runs, deposit insurance, and liquidity. Journal of Political Economy 91: 401–419.CrossRefGoogle Scholar
  23. Fisher, I. 1933. The debt deflation theory of great depressions. Econometrica 1: 337–357.CrossRefGoogle Scholar
  24. Friedman, M., and A.J. Schwartz. 1963. A monetary history of the United States, 1867–1960. Princeton: Princeton University Press.Google Scholar
  25. Gorton, G. 1985. Clearing houses and the origin of central banking in the United States. Journal of Economic History 45: 277–283.CrossRefGoogle Scholar
  26. Honohan, P., and D. Klingebiel. 2000. Controlling fiscal costs of banking crises. Conference paper. Washington, DC: World Bank.Google Scholar
  27. Keynes, J.M. 1931. The consequences to the banks of the collapse of money values. In Essays in persuasion. New York: W.W. Norton, 1963.Google Scholar
  28. Kindleberger, C.P. 1978. Manias, panics, and crashes: A history of financial crises. New York: Basic Books.CrossRefGoogle Scholar
  29. Lucia, J.L. 1985. The failure of the bank of United States: A reappraisal. Explorations in Economic History 22: 402–416.CrossRefGoogle Scholar
  30. Minsky, H.P. 1975. John Maynard Keynes. New York: Columbia University Press.CrossRefGoogle Scholar
  31. Mishkin, F.S. 2001. Prudential supervision: What works and what doesn’t. Chicago: University of Chicago Press.CrossRefGoogle Scholar
  32. Shadow Financial Regulatory Committee. 2000. Reforming bank capital regulation. Washington, DC: American Enterprise Institute.Google Scholar
  33. Von Peter, G. 2004. Asset prices and banking distress: A macroeconomic approach. BIS working paper No. 167. Basel: Bank of International Settlements.Google Scholar
  34. Wicker, E. 1996. The banking panics of the great depression. Cambridge: Cambridge University Press.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Charles W. Calomiris
    • 1
  1. 1.