Recently, our team perused the history of international banking crises to find common themes.
We found that there are themes that occur in some but not all, but there is one steady-eddie: loss of trust.
Credit, debt, and long-standing relationships (with customers and their families) are at the heart of most banking models. Banks take money in, often invest that money to make more money, and then loan money to help communities grow. And, of course, make money on those loans. That’s an oversimplification because there are many bank flavors that do much more, but generally, there’s a money tree that’s watered and harvested and watered more over time.
And trust is at the heart of credit, debt, and relationships.
We found a breakdown in trust in almost every banking crises throughout recorded history.
And bankers aren’t always to blame. Sometimes, for reasons they couldn’t have predicted, their investments go south, customers lose trust in the system, and then there’s a collapse. Here is a list of banking (and banking system) crises, some of which we dig in to more throughout the month of September (2020).**
18TH CENTURY
Crisis of 1763, started in Amsterdam, spread to Germany and Scandinavia
Crisis of 1772–1773, London and Amsterdam
Panic of 1792, New York
Panic of 1796–1797, Britain and United States
19TH CENTURY
Panic of 1819, a U.S. recession with bank failures; culmination of U.S.’s first boom-to-bust economic cycle
Panic of 1825, a pervasive British recession in which many banks failed, nearly including the Bank of England
Panic of 1837, a U.S. recession with bank failures, followed by a 5-year depression
Panic of 1847, United Kingdom
Panic of 1857, a U.S. recession with bank failures
Panic of 1866, Europe
Panic of 1873, a U.S. recession with bank failures, followed by a 4-year depression
Panic of 1884, United States and Europe
Panic of 1890, mainly affecting the United Kingdom and Argentina
Panic of 1893, a U.S. recession with bank failures
Australian banking crisis of 1893
Panic of 1896, acute U.S. recession
20TH CENTURY
Panic of 1901, a U.S. recession that started a fight for financial control of the Northern Pacific Railway
Panic of 1907, a U.S. recession with bank failures
Shōwa Financial Crisis, a 1927 Japanese financial panic that resulted in mass bank failures across the Empire of Japan.
The Great Depression (1929-1932)
Secondary banking crisis of 1973–1975 in the UK
Japanese asset price bubble (1986–2003)
Savings and loan crisis of the 1980s and 1990s in the U.S.
1988–92 Norwegian banking crisis
Finnish banking crisis of 1990s
Swedish banking crisis (1990s)
Rhode Island banking crisis
Peruvian banking crisis of 1992
Venezuelan banking crisis of 1994
1997 Asian financial crisis
Enping financial crisis
1998 collapse of Long-Term Capital Management
1998 Russian financial crisis
Argentine economic crisis (1999–2002)
1998–99 Ecuador banking crisis
21ST CENTURY
2002 Uruguay banking crisis
2003 Myanmar Banking Crisis
U.S. subprime mortgage crisis starting in 2007
2008 United Kingdom bank rescue
2009 United Kingdom bank rescue
2008–2009 Belgian financial crisis
2008–2012 Icelandic financial crisis
2008–2009 Russian financial crisis
2008–2009 Ukrainian financial crisis
2008–2012 Spanish financial crisis
2008–2011 Irish banking crisis
Venezuelan banking crisis of 2009–10
Ghana’s Banking Sector Crisis 2017-2018
To read more about banking crises or to learn more in general about Faller Financial and Notes, go to fallerfinancial.com/note-resources.
Call 844-433-6683 or email info@fallerfinancial.com to sell your mortgage Note, or request a consultation at fallerfinancial.com/contact.
**Sources: Wikipedia.org; historytoday.com; bis.org; jhna.org
Photo by Jan Antonin Kolar on Unsplash
