banking crises

Charles W. Calomiris
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
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Banking crises take a variety of forms ranging from temporary liquidity crises to massive insolvencies. They sometimes coincide with other financial crises in currency and sovereign debt markets, and sometimes occur in isolation. These differences reflect the variety of causal influences that give rise to problems for banks. The unusually crisis-prone experience of the United States historically reflected its unique industrial organization of banking. Policies intended to reduce the incidence of banking crises (especially deposit insurance) have instead often increased the risk of crises, as safety-net protection reduces market discipline, allowing banks to undertake imprudent risks.
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How to cite this article

Calomiris, Charles W. "banking crises." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 23 February 2018 <> doi:10.1057/9780230226203.0090

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