A Study On European Banking Crisis

As the development of economic globalization and financial liberalization, theclosely linked global economy makes the turbulence of the international financialmarket play a more important role in other countries and areas. Undoubtedly, thefinancial industry is the core of modern economy which has a close relationship witheconomic development, while the banking industry is the core of the financialindustry. Although European sovereign debt crisis caused the European bankingcrisis the underlying reasons are due to the particularity of the euro zone’s economicand political system. This crisis is not only a huge challenge for European banks, butalso let people wonder whether the euro zone will face disintegration or not. The twoissues European banks need to deal with urgently are capital complement pressuresand illiquidity problem. Whether European banks can successfully handle the crisisor not directly influence the stability of global financial markets, especially fordeveloping countries. Currently, with European countries’ own efforts and thesupport of organizations such as the European Central Bank, the European bankingcrisis has eased. However, it still leaves a lot of problems untreated, economicrecovery in Europe has a long way to go and global economic growth is still weak.Thus, the European banking crisis has caused widespread study in the internationalfinancial community, especially for China. The study of European banking crisis hasimportant theoretical and practical significance. Earlier studies mostly focus on theEuropean debt problem, this article makes a comprehensive analysis on theEuropean banking crisis aimed at giving China’s banking industry a warn to preventsuch crisis.This paper is divided into five chapters: The first chapter is the introduction, mainly introduces the background,significance, literature review, research and innovation and the lack of methods. Theliterature review part summarizes the study done by scholars on the banking crisisand the European banking crisis.The second chapter focuses on the theoretical knowledge of banking crisis,elaborated on the definition of the banking crisis, the development process and thefactors that lead to a banking crisis. The crisis pointed out in this part is universalbanking crisis which makes a foundation for the followed analysis on the Europeanbanking crisis.The third chapter gives a general introduction on the development of theEuropean banking crisis first, and then focus on the two factors that lead to abanking crisis in Europe.The direct reason is the European debt crisis, while thedeeper reason is due to the fragile of European banking system operating basis, thelack of coordination on the euro currency and financial supervision and the uniformbetween monetary policy and fiscal policy.The fourth chapter focuses on the adverse consequences of the banking crisis inEurope, both in Europe and the whole world. Then next part analyzes the measurestaken to deal with the crisis which has relieved the crisis on some extent, but itslong-term impact well summarized is still existed.The last chapter gives five policy proposals, based on the study of Europeanbanking crisis in this article and the actual situation of China’s banking industry.