Bank Failures Along The Years- Causes And Consequences

Until recent years, formal bank insolvency proceedings were rare occurrences, with governments not coming more often to the rescue of failing banks. As a result, few studies relating to bank failure have paid much attention to the regulatory framework for failing banks and the conduct of formal bank insolvency proceedings. However, in the aftermath of the American financial crisis, more attention has been focused on issues of bank insolvency. Structural reforms in the banking sector of various countries, in particular the implementation of effective exit rules to expel insolvent and non-viable banks from the market, have been considered of primary importance to restoring confidence in the troubled banking sector. In addition, the ability of governments within the European Union to rescue insolvent banks has been significantly limited by strict rules on competition.