Infinite Loop? What Is Behind the Ongoing Turmoil in the Banking Sector?

The war in Ukraine is unfortunately not over, to add insult to injury, Silicon Valley Bank collapses and Credit Suisse acquired by UBS under the Swiss emergency legislation. The merger of Credit Suisse with UBS, Switzerland’s biggest bank, has also raised concerns about the proliferation of more institutions deemed “too big to fail”. Through the study of four financial crises in the past 100 years, this paper believes that behind this potential financial crisis is still the real estate bubble, but the significant problems in the United States are the most worrying. Post-financial crisis recessions are costlier and last longer than normal recessions. When credit booms are superimposed with asset price bubbles, financial crises are highly likely and economic recovery will be slower. In this paper, relative data and regression model are used to analyze the causes of the crisis; further this paper discusses the reasons behind the financial crisis and related conjectures and gives relevant development speculations.

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