Research conducted at Queen’s focusing on historical financial crises has helped to shed light on why such crises happen and what we can do to prevent future banking crises.
The research has had a beneficial impact on policymaking, professional practice, and the historical awareness and knowledge of staff at the Bank of England. It has also had a beneficial impact on the non-academic study of business history and has reached tens of thousands of financial analysts.
WHAT CAUSED THE BANKING CRISIS?
The financial crisis of 2008 was the most serious of its kind since the Great Depression, but can the lessons of the past help us to prevent another banking collapse in the future? Why do banking systems crash and what are the factors underpinning banking stability?
THE RISE AND FALL OF BRITISH BANKING STABILITY
Much of the research is based on Queen’s Professor John Turner’s book Banking in Crisis: The Rise and Fall of British Banking Stability.
The research examines why historical banking systems have been stable and what makes them stable. One of the chief insights is the significant role that extended shareholder liability has played in creating stable banking systems
Using a novel approach to measure the stability of a banking system, the research presents a monthly index of bank share prices stretching back to 1825 and uses this to assess banking stability and identify banking crises.
The research found that the source of much of 2008 banking crisis began with the removal of stringent government controls over banking in the 1970’s. This deregulation meant that, over time, banks started increasing their lending, particularly to the risky real-estate sector, which resulted in a property bubble.
The collapse of this bubble resulted in huge losses for British banks and the collapse and subsequent rescue of the UK banking system.
“By helping staff to acquire knowledge about the history of financial crises, Professor Turner has made a valued contribution to the Bank of England’s pursuit of its objectives promoting the safety and soundness of regulated banks and insurers and maintaining financial stability…”
What impact did it make?
EMBEDDING FINANCIAL HISTORY INTO POLICY MAKING
The research has had a beneficial impact on policy-making, professional practice, and the historical awareness and knowledge of staff at the Bank of England, particularly regarding its prudential objectives. Insights from the research have reached an estimated 125,000 financial analysts across the globe.
Since 2014, Professor Turner has been actively helping the Bank of England embed financial history into its policymaking, drawing on his research and expertise accumulated while preparing Banking in Crisis.
Impact related to the UN Sustainable Development Goals
Learn more about Queen’s University’s commitment to nurturing a culture of sustainability and achieving the Sustainable Development Goals (SDGs) through research and education.