Study of Banking Crises and Failures Dissertation

Study of Banking Crises and Failures - Dissertation Example The number of studies and research papers probing causes and types of bank failures is substantial. These research efforts have presented wide ranging evidence of bank failures from across various continents and cover the period as early as the Great Depression period of 1930s to as recent as couple of years back just prior to release of final Basle II framework in June 2004.Great Depression was a period of a downside economic shock and affected the larger economies in a major manner. While general economic outlook was highly pessimistic in these years it often precipitated in economy wide panics running through money and capital markets. Several research papers have studied the effect of the panics on the banking system and focused on enumerating the timing and geography of bank failures during panics (Wicker,1996).While some other research efforts have attempted to explain if panics were one time abnormal periods that resulted in the failure of even solvent banks by comparing banks that failed in panic periods to banks that failed outside such periods and finally tracing the survival of some such banks.The former paper arrives at the conclusion that banks failing during panic periods were weaker than banks that survived and not quite similar in financial characteristics to banks that failed during non-panic periods. Literature has identified four major panics were identified in the Great Depression period (1930-1933). Friedman and Schwartz attribute the 1930 panic to a contagion of fear"