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Making banking crisis proof: Helping the Bank of England and financial analysts learn from past crises

Researchers at Queen’s have carried out work focusing on historical financial crises to help shed light on why they happen and what we can do to prevent them in the future.

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. It has also had a beneficial impact on the non-academic study of business history and has reached tens of thousands of financial analysts.

Research Challenge

The 2008 financial crisis had staggering political and financial implications which were felt across the globe. Few could have predicted its arrival, nor the effect of its lasting impact, still prevalent across global markets today.

But what were the main causes of the crash? Could it have been predicted and can the lessons of the past help us to prevent another banking collapse in the future?

Our Approach

Much of the research is underpinned by books authored by Queen’s academics: ‘Banking in Crisis: The Rise and Fall of British Banking Stability by Professor John. D Turner (2014) and ‘Boom and Bust: A Global History of Financial Bubbles’ by Professor John. D Turner and Dr William Quinn.

‘Banking in Crisis’ was the first academic study to tell the story of the rise and fall of British banking stability over the past two centuries, and it sheds new light on why banking systems crash and the factors underpinning banking stability.

The research investigated why historical banking systems have been stable and what makes them stable. One of the chief insights is the important role that extended shareholder liability has played in creating stable banking systems.

Using a novel approach to measure the stability of a banking system Turner developed a monthly index of bank share prices stretching back to 1825 and used this index to assess banking stability and identify banking crises. The main lesson for central bankers and policymakers is that banking can only be stable if bank shareholders have ‘skin in the game’ or if banks face stringent government controls on their assets and lending.  

Boom and Bust’  explores a history of bubbles including Paris and London in 1720, Latin America in the 1820s, Melbourne in the 1880s, New York in the 1920s, Tokyo in the 1980s, Silicon Valley in the 1990s, Belfast and Dublin in the 2000s, and Shanghai in the 2000s. 

The publication takes readers on a 300-year historical tour of the world’s twelve most notorious financial bubbles, helping readers to understand why bubbles happen, and why some have catastrophic economic, social and political consequences whilst others have actually benefitted society.

What impact did it make?

Turner’s 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 with regard to its prudential objectives.

Insights from his research have reached an estimated 125,000 financial analysts across the globe. His book, Banking in Crisis, has sold more than 3,500 copies and has been recognised by the Business Archives Council for the contribution which it has made to the study – academic and professional – of business history.

Since 2014, 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, participating in multiple advisory commitees on banking governance.

‘Banking in Crisis’ was awarded the Wadsworth Prize 2014 by the Business Archives Council. The citation from the prize committee stated the following: “This is both an original and an important book. It provides a lucid analysis and critique of the development of British banking over the last two centuries…Banking in Crisis elucidates with admirable clarity complex financial concepts and debates as context for discussion of the long- term development of British banking…In sum, it is a book that is original, insightful, persuasive, timely and highly readable.”

Our impact

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.

Key Facts

  • Quinn and Turner’s book ‘Boom and Bust – A global History of Financial bubbles’ was named a Financial Times Best Book of the Year’
  • By July 2020, Banking in Crisis had sold over 3,500 copies and a Chinese translation of the book was published in spring 2020.
  • United Kingdom
John Turner
Queen's Business School
Gareth Campbell
Queen's Business School
Christopher Coyle
Queen's Business School
William Quinn
Queen's Business School
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