By Ranald C. Michie
The worldwide monetary obstacle made its first visual appeal in Britain in the direction of the tip of 2007 with the failure of the Northern Rock financial institution. It then reached an extraordinary depth a yr later while the govt. used to be pressured to interfere to avoid the cave in of Lloyds/HBOS and RBS/Natwest. ahead of those occasions the British banking process possessed a protracted verified acceptance for resilience and competence that made it probably the most popular and relied on on the planet. The monetary hindrance of 2007/8, and the next revelations concerning the behaviour of bankers, destroyed that acceptance and drove a wish for a whole reform of the British banking process. Forgotten during this headlong rush in the direction of radical restructuring have been the explanations why the British banking process had turn into so well known and relied on. the purpose of this ebook is to provide an explanation for why the British banking approach won its attractiveness for resilience and competence, maintained it for over a hundred years, after which misplaced it in this kind of fast and excellent model.
To in attaining that goal calls for a research of the complete banking approach. Banks are key parts of a fancy economic climate constantly interacting with one another, and regularly altering through the years, This makes the normal differences drawn among kinds of banks, together with these specialising in overseas finance, discounts and loans, company lending, and retail deposits and borrowing, beside the point for any long term research. The differences among varieties of banks have been neither absolute nor everlasting yet relative and transitority. Banks have been additionally principal to either the funds method and the money industry with no which no smooth economic climate might functionality. What this ebook is set is the improvement of the British banking process as a complete over greater than 3 centuries. in simple terms with such an figuring out is it attainable to understand what the British banking method accomplished after which maintained from the center of the nineteenth century onwards, why it was once misplaced in one of these brief house of time, and what has to be performed to come it to the location it as soon as occupied. with out such an realizing the errors of the new previous are destined to be repeated time and gain.
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Extra resources for British banking : continuity and change from 1694 to the present
These trends indicate that after a period of rapid expansion in numbers a process of consolidation took place though the precise timing varied according to the type of bank. 3. 54 Special Report and Reports from the Select Committee on Building Societies (No. 58. 4. This differs at times from the series presented here in that it includes unregistered building societies where such information was known. 55 TRENDS I N BRITISH BANKING What the numbers suggest was that there were underlying economies of scale in banking that encouraged concentration over the course of the nineteenth and twentieth centuries.
4. 184–8, 302–11. 190. 7, 53–4. 7 F. 11. 8 For a recent use of the 2008 date by the staff at the Bank of England see Z. Liu, S. Quiet, and B. 2–8. 18 British Banking This long period without crises meant that the contribution made by British banks to stability was increasingly taken for granted. 10 This neglect of stability as an important element within British banking has been recognized as a fundamental ﬂaw in the light of the 2007/8 ﬁnancial crisis. 11 Contributing to that attitude was the belief that stability was only partly the product of what the banks had done, and then to a lesser degree.
This stability in the number of UK banks, especially during the twentieth century, has led many to see British banking as a static system in which the existing banks were immune from the competition that came from new entrants. This perception of British banking as a closed system is an incorrect one, as revealed by the data on the changing number of British banks. What is apparent is that, at no stage, were there no new entrants into British banking. The number of new entrants reached an all-time high in the late eighteenth and early nineteenth centuries but there were subsequent peaks such as during the 1830s and 1860s as well as in the 1980s and 1990s.