When banks go bust: Four factors at play
Trust, confidence, contagion and systemic risk
Banks are in the news again. Two bank failures in the US, and the forced takeover of Credit Suisse by UBS in Switzerland, have triggered the worst turmoil in the banking sector since the 2008 financial crisis. There's talk of a lack of trust, of a collapse in confidence, of contagion and systemic risk. Jannie Rossouw, visiting professor at the Business School of the University of the Witwatersrand, explains why they're concepts worth understanding.
The whole principle of banking is built on trust. Clients deposit money with banks to receive interest and trust that their deposits will be repaid at maturity. Banks lend money to
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