Banks have taken centre stage in the ongoing financial and economic crisis, and any definitive resolution to the crisis essentially hinges on banks regaining financial health and public confidence on the basis of sustainable and welfare-enhancing business models. However, not all banks have been equally affected by the crisis, nor have they been equally responsible for it.
The main players have mostly been large international investment banks or banks that had moved away from traditional retail banking activities. This movement towards a presumably more “modern” business model relied principally on the origination, distribution and trading of often complex securities, on other fee-income generating activities, as well as on a funding structure more dependent on wholesale markets.