Luc Laeven and Fabian Valencia...ave contributed richly to the raw material of crisis economics. Labouring away at the International Monetary Fund, they have assembled a detailed database of 147 banking crises from 1970 to 2011. They recently published a new working paper detailing some of their latest findings. There's lots of fascinating stuff in here but what leaped out at me was a chart showing the likeliest months for crises to begin.
The frequency with which the world goes to hell in September seems hardly random. Unfortunately the authors provide no explanation for this beyond observing, "An interesting pattern emerges: banking crises tend to start in the second half of the year, with large September and December effects."
There may be something of a Austrian school of economics explanation for this.
Austrian business cycle theory holds that the boom-bust business cycle is the result of central bankers printing money and distorting the consumption-savings ratio in favor of savings and the bust occurs when the printing stops and the economy adjusts itself back in favor of a more consumer leaning consumption-savings ratio, which sees more money head into the consumption sector.
When a central bank stops printing money, September may act as something of a catalyst to push the consumer-savings ratio in favor of consumption more rapidly, since September is likely a very heavy consumption spending month. Consumers spend money in September for new school clothes for kids. The colder months begin to approach, so winter clothes are bought. More televisions are likely bought because of the colder weather, as more people spend time inside. Thus, there is more consumption and liquidation of savings (including stock ownership and withdrawals from banks) in September to fund the increased consumer spending.
October actually seems to be the month when stock market crashes occur most often (Think October 1929 and October 1987), as opposed to September. This may be a continuation of the problems started in September. Stocks go down and consumers have spent money that previously would have propped up the stock market. Further, October stock market liquidations also occur late in the month as people start thinking about Christmas shopping and less money is added to the stock market.
Indeed, WiseGeek explains Christmas Savings Accounts this way:
Most Christmas club savings accounts are opened in January. While there may be some institutions that require a minimum deposit to start, most have no minimum. The account is left open through the end of October, at which time the owner can withdraw the money on 1 November and have enough funds for holiday shopping.In other words, the last payment on Christmas club account are in October (with early October likely being the heaviest). Further, by the end of October, after spending for clothes in September, the last thing most people are thinking of is putting money in the stock market. They are starting to think about keeping money on the side for Christmas spending.