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.
