History of financial crises between 1875 and 2007
Financial crises are as old as capitalism itself and can be traced at least to the Dutch tulip mania* of 1636-37 and the South Sea Bubble** of 1719-20. Over the years with changes in the economic landscape the nature of such crises has changed. Here's a look at history of financial crises between 1875 and 2007:
1. Life Before Collapse of Lehman.
1875-1913: Gold Standard Era
RELATIVELY BENIGN: There were 35 sovereign defaults, mostly in Latin America. Those in Europe were in Greece (1893), Portugal (1890), Russia (1885) and Spain (1882). Banking crisis were infrequent; most notable were the US (1873, 1893 and 1907)
1919-1939: Inter-War Years
VERY TURBULENT: This was when the Great Depression happened. There were 21 bank crises spreadacross all continents, except Asia, and several currency crises during this period. There were 30 episodes of sovereign defaults
1945-1971: Bretton Woods Period
RELATIVE CALM: Partly explained by booming world growth, controls on fi nancial markets and capital fl ows. Many banks were brought under state control. Many countries used fi nancial systems to promote exports and protect domestic producers.
So there were few banking crises. But currency crises were regular during the Bretton Woods period as a fi xed exchange rate was almost inconsistent with the then macroeconomic policies. Capital curbs in suppressing currency crises were less effi cacious.
1973-2007: Liberalisation Begins
MOST CRISIS-PRONE: West liberalised capital account and banking crises were back too. Sharp oil price spike catalysed a prolonged global recession; rich nations in the soup as well (UK, 1974, and Germany, 1977). Early 1980s saw commodities crashing.
Combined with volatile US interest rates, a spate of banking and sovereign debt crises ocurred in emerging economies. LatAm was hit again; Africa too. 1990s: Banking crises in Nordic countries as capital infl ows andreal estate prices surged.
3. But crisis Frequecy Shot up After 1970. Mapping Sources of Major Shocks The incidence of fi nancial crisis has been the highest over the past three decades or so. There were 124 episodes of banking crisis, 211 episodes of currency crisis and 64 episodes of sovereign debt crisis.
Source : ET BUREAU
Financial crises are as old as capitalism itself and can be traced at least to the Dutch tulip mania* of 1636-37 and the South Sea Bubble** of 1719-20. Over the years with changes in the economic landscape the nature of such crises has changed. Here's a look at history of financial crises between 1875 and 2007:
1. Life Before Collapse of Lehman.
1875-1913: Gold Standard Era
RELATIVELY BENIGN: There were 35 sovereign defaults, mostly in Latin America. Those in Europe were in Greece (1893), Portugal (1890), Russia (1885) and Spain (1882). Banking crisis were infrequent; most notable were the US (1873, 1893 and 1907)
1919-1939: Inter-War Years
VERY TURBULENT: This was when the Great Depression happened. There were 21 bank crises spreadacross all continents, except Asia, and several currency crises during this period. There were 30 episodes of sovereign defaults
1945-1971: Bretton Woods Period
RELATIVE CALM: Partly explained by booming world growth, controls on fi nancial markets and capital fl ows. Many banks were brought under state control. Many countries used fi nancial systems to promote exports and protect domestic producers.
So there were few banking crises. But currency crises were regular during the Bretton Woods period as a fi xed exchange rate was almost inconsistent with the then macroeconomic policies. Capital curbs in suppressing currency crises were less effi cacious.
1973-2007: Liberalisation Begins
MOST CRISIS-PRONE: West liberalised capital account and banking crises were back too. Sharp oil price spike catalysed a prolonged global recession; rich nations in the soup as well (UK, 1974, and Germany, 1977). Early 1980s saw commodities crashing.
Combined with volatile US interest rates, a spate of banking and sovereign debt crises ocurred in emerging economies. LatAm was hit again; Africa too. 1990s: Banking crises in Nordic countries as capital infl ows andreal estate prices surged.
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3. But crisis Frequecy Shot up After 1970. Mapping Sources of Major Shocks The incidence of fi nancial crisis has been the highest over the past three decades or so. There were 124 episodes of banking crisis, 211 episodes of currency crisis and 64 episodes of sovereign debt crisis.
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