( f ) ( e ) ( d ) ( g ) ( h ) ( i ) ( k ) ( j ) ( a ) famine / end of railroad boom ( b ) overextension of credit from 1855 - 1866 ( c ) failure of overend gurney ( d ) failure of city of glasgow bank ( e ) support for barings ( f ) w w i ( g ) currency and bank note act ( h ) w orld w ar ii ( i ) secondary banking crisis ( j ) small banks crisis ( k ) current crisis source : bank of england. chart 6 : number of deposit insurance schemes and crises number of adopters 1934 – great depression ( us ) 1977 – banking crisis ( spain ) 1982 – banking crisis ( kuwait ) 1985 – banking crisis ( kenya ) 1994 – banking crises ( czech republic, uganda ) 1995 – banking crises ( brazil, bulgaria ) 1996 – banking crises ( belarus, lithuania ) 1996 - 1998 – asian crisis ( indonesia, korea, malaysia, thailand ) 1998 – banking crisis ( ukraine ) 1999 – banking crises ( ecuador, el salvador ) source : demirguc - kunt, a., kane, e., and laeven, l ( 2008 ) ; laeven, l. and valencia, f ( 2008 ). chart 7 : leverage and risk - taking in uk banks total asse ts / tier 1 capital 2005 - 2008 2001 - 2004 1997 - 2000 t ier 1 ratio of 4 % t ier 1 ratio of 8 % 0. 0 0. 1 0. 2 0. 3 0. 4 0. 5 0. 6 0. 7 0. 8 0. 9 1. 0 risk we ighte d asse ts / total assets source : published accounts and bank calculations. chart 8 : lcfis ’ trading portfolios and financial leverage – 2007 line of best fit total assets / tier 1 capital ubs deutsche socgen barclays bnp rbs citi bofa credit suisse hsbc jpm 0. 0 0. 1 0. 2 0. 3 0. 4 0. 5 0. 6 t rading assets / total assets 0. 7 0. 8 sources : published accounts and bank calculations chart 9 : leverage and risk - taking in international banks – 2007 total adjuste d asse ts / tier 1 capital 4 % t 1 capital ratio ubs deutsche credit suisse socgen rbs bnp citi barclays boa hsbc jpm 0. 0 0

us, depositor preference has operated nationally since 1993, with retail deposits ranking ahead of wholesale debt. there are benefits to depositor preference both ex - ante ( by heightening debtor incentives to monitor risk ) and ex - post ( by facilitating resolution ). there are also some potential downsides, including causing unsecured creditors to run sooner. it may be a good time to reweigh these arguments in the uk. • reconsidering the industrial organisation of banking : over the past few decades, the global banking system has evolved into a particular organisational form, with a small number of large banks, a high degree of concentration and relatively low rates of entry and exit. events of the past two years have accelerated these trends. in 1998, the five largest global banks had around 8 % of global banking assets. by 2008, this fraction had doubled to around 16 % ( chart 10 ). these structural trends worsen the time - consistency problem for the authorities, increasing the pressure for state support to banks “ too important to fail ”. this has heightened recent interest in rethinking the industrial organisation of finance. 19 there are a number of potential forms such a restructuring could take. 20 in weighing these options, there may be lessons from an, on the face of it, unlikely corner of finance : hedge funds. hedge funds started this crisis in the doghouse. yet they are the dog that has not barked. their industrial structure may explain why. unlike banking, the hedge fund sector does not comprise a small number of large players, but rather a large number of relatively small players. the largest hedge funds typically have assets under management of less than $ 40bn, the largest banks assets in excess of $ 3 trillion. unlike banking, concentration in the hedge fund sector is low and has been falling. the top 5 hedge funds comprise around 8 % of total assets, down from 30 % a decade ago ( chart 10 ). unlike banking, the business models of hedge funds are typically specialised rather than diversified. and unlike banking, entry and exit rates from the hedge fund industry are both high. the annual average attrition rate for hedge funds is around 5 %. at present, it is around double that. among us banks, the average attrition rate over the past few decades has been less than 0. 1 % ; it has not come close to hitting 5 % at any point since the great depression. it may be coincidence that the structure of the hedge fund