The 2023 banking crises: the causes and the role played by bank management, supervisors and regulators

Abstract

The events of 2023 have served as a reminder of how quickly banking crises can occur. This article analyses the roots of the problems which, ultimately, against a backdrop of uncertainty and rapid contagion effects, affected banks whose business models, governance and risk management presented significant weaknesses. The article also reviews the main implications for the banking sector and authorities worldwide. These events are a fresh reminder that the banking business must be based on business models that are sustainable over time and on appropriate risk management. In addition, the events again highlight the importance of supervisory activity having available the tools needed to guarantee an early and effective response. Lastly, although the current regulations have helped to check the systemic reach of crises, thanks to the increased resilience of the banking sector, reinforcing again the need to implement the Basel III framework, there are certain areas where analysis of the operation of the prudential regulatory framework should continue.