What is sociological about banks and banking?

We know again that banks matter. The eco-nomic crisis of 200-2008 offered a harsh reminder that the health of a nation’s financial system makes a big difference to the daily lives of ordinary people. Indeed, people around the world were hurt by the financial crisis and subsequent slowdown in the global economy. During the Depression of the 1930s, people learned their own version of the same lesson, but with the passage of time, and decades of financial stability, memory faded. The speed with which large and seemingly robust institutions like Bear Stearns and Lehman Brothers collapsed, and the fact that the whole system seemed to totter on the edge of failure, shows that the strength of financial institutions can dissipate almost overnight. Banks depend on a mysterious quality called “confidence,” and even today confidence can disappear in a flash. These dramatic events underscore that while it is important for financial institutions to be “sound,” it also matters that they appear to be sound: collective perceptions matter. Here, in addition to analyzing the obvious importance that financial institutions possess, I also will argue that banks and banking are sociologically interesting. What they do, and how they work, engages some classic sociological topics.