This is an extension to the courses 3.20603 and 3.40602. It looks at the causes and consequences of bank panics, the subsequent collapse of banks and their consequent impact on the financial sector and the rest of the economy.

The course also discusses remedial or corrective measures to prevent bank panics, subsequent failures and mitigate bank failures. Issues of financial liberation and regulation are also discussed in the context of both causes of bank panics, bank failures and mitigation on bank failures.

In studying the bank failures, the importance of the banking sector within the financial system is also examined.