On The Banking Crisis

The thesis covers the evolution of banking crisis,the causes resulting in banking crisis and influences and the contagion effects of it,comparing the banking crisis in developed and developing countries,comparing the banking safety net in Britain,America and Japan. From which the author makes suggestions on how to improve Chinese banking safety net.The introduction in the first chapter limits the object of the study. A banking crisis refers to a situation in which actual or potential bank runs or failures induce banks to suspend the internal convertibility of their liabilities or which compels the government to intervene to prevent this by extending assistance on a large scale. IMF divided financial crisis into currency crisis,banking crisis,debt crisis and systematic crisis. In a broad sense,banking crisis is one of financial crisis. And it just means financial crisis while it leads to the disorder of the whole payment system and the decreases of real economy.In the second chapter it analyzes the evolution of banking crisis and banking safety net and the theory on banking crisis. The author makes five hypotheses on banking crisis. These hypotheses are industry life cycle hypothesis,industry concentration ratio hypothesis,chaos model,and the evolution of institution hypothesis and regulation hypothesis. There exist common and different characteristics between banking crisis in different period of the history. The banking crisis from 14 century to now fully show their international and contagion characters which are increasing with the development of the international banking business. There is close relation between banking crisis and stock market crisis from South Sea Bubble in!720' to the latest financial crises. The compound feature and interaction of the different types of financial crisis becomes more obvious since 1930'.In the third chapter the author studies the causes and influences of banking crisis. Any bank may fail because of different external risks,the bankers' limited information and rationality and the specific characteristics of banking business. The failure of a bank could further lead to banking crisis because of bank runs and overlending. There are connections between banking and real economy,monetary policy,and fiscal policy,and international balance of payment. The growth and cycle of economy may lead to banking crisis;banking crisis may also lead to misallocation and underutilization of resouces,and thus to losses of real output. We use the ratio of banking crisis' cost to Gross Domestic Product to measure the severity of banking crisis.In the fourth chapter the author researches the contagion effect of different types of financial crisis. In an economy,banking crisis may induce currency crisis,debt crisis;currency crisis may also induce banking crisis,debt crisis;the financial crisis of one economy may induce the same or different types of financial crisis in the other economy. The asymmetric information of agents in different financial markets make stock market crisis lead to banking crisis and currency crisis,then lead to debt crisis.In the next two chapters the author compares banking crisis in developed and developing countries,the banking safety net in main industrial countries;studies thepossibility of forecasting banking crisis and the measures to control banking crisis. The banking crises were mainly caused by inferior asset quality of banking in developed countries and there were no bank runs. Among the developing countries,large withdrawals of deposit and runs on banks have been more frequent than developed countries. The frequencies of banking crisis in developing countries are higher than developed countries. The safety provided by the banking safety net may increase adverse selection and moral hazard problems and decrease the efficiency of banking. Appropriate bank failures may be beneficial to the safety and efficiency of banking at the same time. The author concludes that we can not forecast accurately the banking crisis in a long run,in a short run it may...