Banking crisis, determinants and consequences. Have they lessons for today 2400-ZEWW492
1. Theory: definitions – financial crisis, banking crisis, currency crisis, models of financial, banking, currency crises, determinants of a banking crisis.
2. Influence of economic crisis on a banking crisis, main types of the banking crises, banking crisis vs. currency crisis, currency crisis vs. banking crisis, costs of crises.
3. Banking system stability as a public wealth, need for protection of activities against crises, security network; hazard identification; symptoms, alert systems, banking institutions evaluation (rating) systems.
4. Historical banking crises – empirical specification: the case of a crash of Italian banking houses in 14-16th centuries – reasons, consequences; collapse of the European finance institutions in 16-17th centuries; bankruptcies of Spain and France – growth of public banking; evolution of a public debt.
5. Empirical specification of banking crises and easy-money speculations in 17-18th centuries; Holland’s banks and the tulip bubble 1637; Britain’s South Bubble Sea, John Law system and the French banking; collapse of the bankers financing speculations.
6. Economic crises and banking crashes in 19th century. Financial crisis and economic crisis, a mechanism of overinvestment; transfers and infections at a multinational scale, panic and bank runs mechanism.
7. Banking crises (by the late 19th century): emergence of legal regulations; British leading financial institutions; the financial responsibility; the Bank of England as a lender of last resort. The conditions of French, German and Polish private banking; creation of the Federal Reserve System. Models of the banking systems: British, Continental (German) - or Rhine and Anglo-Saxon - and the banking system in the US.
9. European banking after the 1st World War; Polish banking and currency crisis (1925): a problem with banking risk, especially the risk of interest rate and exchange rate.
10. The Great Depression: the Wall Street crash and the phenomena of bank bankruptcies – their reasons; spectacular bank runs; attempt to explain their reasons and mechanisms with the use of present day theories.
11. Consequences of the Great Depression: legal regulations, emergence of the regulatory agencies in the US. The Glass Steagall Act and the regulation of a traditional banking activity. Bankesr’s deposits insurance systems; Banking supervisory boards; supervision over capital markets; evolution of the banking regulations in Europe (Germany, England, France).
12. The Great Depression and the Polish banking system; growing position of the state banks; crises of the private banking sector.
13. Banking crises in the 1980s. and 1990s. in the stable economies: Scandinavian countries, USA (crash of individual banks in the 1980s. and crash of LTCM in 1998), Great Britain (1990-91, 1995), Japan (1994-1995, 1997). Crisis management and restoration of banking systems.
14. Financial crises in the 1990s. in the emerging economies: specificity of crises in Asia; structural weakness of the Asian economies; significance of the behavioral factors: panic, herd effect; restoration programs, costs, case study – Crisis in Indonesia and South Korea.
Type of course
Prerequisites (description)
Course coordinators
Learning outcomes
Knowledge:
After completing the course, the student: knows the theories and models explaining the reasons and mechanism of financial, banking and currency crises; understands the specifics of the financial and banking crises and their importance to the process of changes in the banking systems and to their legislative-institutional environment in the historical perspective; is able to explain the mechanism of crises transfer among the different sectors of the economy at the domestic and international scale in the historical depiction; is able to explain the specifics of the risk of the banking activity in the consecutive historical periods; knows the processes and reasons affecting the bank crashes in different historical periods.
Competences:
After completing the course, the student is able to: perform an analysis of the financial, banking and currency crises from the past, using the up to date (present day) categories and economic instruments; explain an influence of a historical context on the distinctness in the course of the financial crises; associate (put together) the role in which both behavioral and economic factors may trigger the banking crises; explain the mechanism of infecting and transferring the crises among the sectors of economy and the financial institutions; critically evaluate the methods of the crisis management and the costs of the security network: construction: costs of system stability vs. moral hazard.
Social competences:
A student should perceive that the shape of the banking systems security network results as a product of historical experience in the financial crises. A student should be able to interpret and formulate his own conclusions, based on critical analysis of sources, views of different
authors, premises and arguemnts.
SU05, SU06, SK01, SK03, SU04, SU03, SU02, SU01, SW03, SW02, SW01, SW04, SW05, SK02, SK04
Assessment criteria
1. Written paper: size 18000 – 27000 marks, workshop requirement equal to scientific paper; oral presentation, the paper may be prepared individually or in a small group
2. Activity in discussions on topics mentioned in the presented papers
3. Presense in class, 2 absences are allowed
Bibliography
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Oręziak L., System bankowy Stanów Zjednoczonych – dotychczasowy rozwój i kierunki zmian „Bank i Kredyt” 2000, nr 4 (bankowe ABC)
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