Source: Wind
Hong Kong's Wande News Agency reports that European and American banks have been thunderous one after another, and depositors, investors, and policy makers are all paying close attention to the current state of the banking industry. How does the current situation compare with historical banking problems? The researchers said that the banking crisis of the past eight centuries was similar to what happened in recent weeks.
Researchers at Yale University's School of Management and Boston College's Carroll School of Management said that the bank crisis in history was similar to everything experienced now, and the costs and pain borne by society.
Andrew Metrick of Yale University and Paul Schmelzing of Boston College found that of the 880 crises affecting 138 countries, 57 of the events (6.5% of the total sample size) were similar to the current banking crisis.In this moment, account guarantees and emergency loans are tools that regulators and banks use to calm tension.
Andrew Metrick and Paul Schmelzing pointed out that of the 880 crises, more than half were systemic and had far-reaching effects. However, they pointed out that nearly 80% of 57 similar historical events, including the financial turmoil in the US from 2008 to 2009, were widespread and systematic. They wrote:”In March 2023, the combination and scale of interventions strongly indicated that we were already in the midst of a systemic event.”
What will happen next is unknown.
On Monday afternoon, the US Federal Deposit Insurance Corporation (Federal Deposit Insurance) announced that First Citizens Bancorp (First Citizens Bancorp) has agreed to assume all deposits and loans of the transition bank established by the FDIC after the Bank of Silicon Valley went out of business. There is some overlap between current and response measures during the Great Recession, but there are also differences; both include account guarantees.
Paul Schmelzing spent the FDIC's coverage from $100,000 in October 2008. This limit became permanent in 2010 and has now climbed to $250,000.
Confidence is what you need most right now. According to a YouGov poll released last week, 66% of Americans believe big national banks are safe, and 68% believe small regional banks are safe. Nearly 60% (59%) say Silicon Valley Bank's failure is largely due to poor decisions made by the bank's executives. This week, some of the federal government's top financial regulators will testify to Senate and House committees on recent bank failures.
As needed, this week's hearing includes the collapse of Silicon Valley Bank and New York Signature Bank, and whether regulators guarantee all bank customers' deposits, not just those below the $250,000 FDIC threshold.
The researchers looked more closely at 57 of these historical events and carefully screened which overlapped with today's events the most, including debt-debt write-downs. Three of these bank crises were found to be very similar to the current situation, which had not occurred in the US in the past 30 years.
Andrew Metrick and Paul Schmelzing said the next step would be to study in greater depth the three historical events they identified, namely the 1893 Australian banking crisis, the 1982 Columbia banking crisis, and the 1987 Danish banking crisis, while providing lessons that can be learned from today.
Editor/Somer