Complexity and Crisis in the Financial System
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Complexity and Crisis in the Financial System

Critical Perspectives on the Evolution of American and British Banking

Edited by Matthew Hollow, Folarin Akinbami and Ranald Michie

With contributions from across the disciplines of law, history, finance, and economics, Complexity and Crisis in the Financial System offers a truly interdisciplinary study of the relationship(s) between crises and complexity in the US and UK financial markets. Taken together, the contributions in this volume not only challenge many often taken-for-granted ideas about the nature of financial crises, but also broaden our understanding of the long-term causes (and consequences) of the global financial crisis of 2007–2008.
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Chapter 11: From the mid nineteenth-century bank failures in the UK to the twenty-first-century Financial Policy Committee: changing views of responsibility for systemic stability

T.T. Arvind, Joanna Gray and Sarah Wilson


This chapter compares the UK’s response to mid-nineteenth-century banking failures and the post-2008 banking crisis. Our focus is on the official narratives of cause and effect that emerged in the aftermath of each crisis, and the thrust and direction of the measures taken by regulators and courts in the response to each crisis. We argue that contrary to the standard understanding, official responses to financial instability during the Victorian crises reveal the same concern with systemic issues and systemic stability as responses to the post-2008 crisis. Official reviews, case law, and administrative decisions during the Victorian period – and particularly the 1850s – show a clear understanding of and concern about systemic risk and contagion, and of the importance of bolstering the system through the quality and character of management within individual institutions. Despite the similarity of the Victorian and modern understandings, however, the Victorians framed very different prophylactic institutional reforms to curb the likelihood of future systemic shocks. We juxtapose the differing responses to episodes of financial crisis and failure, which are so distant in time and yet demonstrate remarkably similar demands both for accountability at law for the past and for law to help ensure a safer future, and argue that there is sound reason to play close attention to the lessons the Victorian approach might have to offer.

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