A sweeping look at the evolution of commercial banks over the past two
centuries
Commercial banks are among the oldest and most familiar financial
institutions. When they work well, we hardly notice; when they do not,
we rail against them. What are the historical forces that have shaped
the modern banking system? In Unsettled Account, Richard Grossman
takes the first truly comparative look at the development of commercial
banking systems over the past two centuries in Western Europe, the
United States, Canada, Japan, and Australia. Grossman focuses on four
major elements that have contributed to banking evolution: crises,
bailouts, mergers, and regulations. He explores where banking crises
come from and why certain banking systems are more resistant to crises
than others, how governments and financial systems respond to crises,
why merger movements suddenly take off, and what motivates governments
to regulate banks.
Grossman reveals that many of the same components underlying the history
of banking evolution are at work today. The recent subprime mortgage
crisis had its origins, like many earlier banking crises, in a boom-bust
economic cycle. Grossman finds that important historical elements are
also at play in modern bailouts, merger movements, and regulatory
reforms.
Unsettled Account is a fascinating and informative must-read for
anyone who wants to understand how the modern commercial banking system
came to be, where it is headed, and how its development will affect
global economic growth.