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The Causes and Management of Banking Crises


  • Tony Latter


Central banks are concerned for the stability of the banking sector, but the world seems to be continually beset by banking crises. The structural evolution of the banking sector may have a significant bearing on questions of solvency and stability. Banking systems have developed in different ways among countries, for a variety of reasons, but the trend has been towards an increasingly liberal stance by the authorities as regards allowing banks to diversify their activities. This should be welcomed, but only on two conditions: first, that the management of individual banks is sufficiently capable; and secondly that every bank can be effectively supervised by the central bank (or other responsible regulatory body). Access by foreign banks to a particular country is usually beneficial in terms of competition and efficiency. The causes of banking crises can be categorised under several headings: macroeconomic instability; deficient supervision; poor strategies; weak management; inadequate control systems; operational failures; fraud. The experience of a number of countries is reviewed. Whatever the causes, the authorities need a coherent strategy for addressing such crises. Various aspects of crisis management are discussed, and recommendations made. This handbook is also available in Russian and Spanish.

Suggested Citation

  • Tony Latter, 1997. "The Causes and Management of Banking Crises," Handbooks, Centre for Central Banking Studies, Bank of England, number 12.
  • Handle: RePEc:ccb:hbooks:12

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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Anastasiou, Dimitrios, 2016. "Management and Resolution methods of Non-performing loans: A Review of the Literature," MPRA Paper 77581, University Library of Munich, Germany, revised 2017.

    More about this item


    Causes; Management; Banking; Crises;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation


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