Does the Bank Sector Turmoil Make a Recession More Likely?

Does the Bank Sector Turmoil Make a Recession More Likely?

Within the last couple of weeks, global markets have become jittery about the banking sector, after a series of concerning events that started with the collapse of Silicon Valley Bank (SVB)—the biggest bank failure in the U.S. since the 2008 financial crisis. SVB and Signature Bank have been taken over by U.S. regulators, and in Switzerland over the weekend Credit Suisse was bought by UBS—the country’s biggest bank—in a deal totalling more than $3 billion, aimed at preventing a collapse.



For some, the turmoil among banks has brought bank memories of the 2008 financial crisis, leading to questions about whether we are heading into another prolonged recession. But economists say this time is different and caution against comparing the bank failures to those of 2008.



“It’s going to feel uncomfortable for a period of time but I don’t think this is going to turn into a full blown repeat of the financial crisis,” says Ryan Sweet, Chief U.S. Economist at Oxford Economics.



Why was Credit Suisse sold?



Credit Suisse has been plagued by a series of controversies and scandals in recent years but it was a comment from the chairman of its largest investor, the Saudi