Was the recent banking system near-meltdown a one off event or should investors expect more frequent blow-ups in the sector?

As investors look back on events in the financial market in the last year or so, two things are likely to stand out.

One, clearly, would be the instability of the banking system and the second would be the volatility of equity markets.

In most cases, this instability is attributed to a binge on easy credit that led many to over-extend themselves and the creation of a speculative bubble in the US housing market.

The question here is whether this crisis was a one-off event, or a periodic feature of the banking system.

Many are treating it as a one-off event. The bankers, naturally, are keen to portray the 2008 crisis as an aberration caused by excessive lending at some institutions which can be avoided in future.

Some politicians and regulators are, in a way, supporting this view by proposing structural reforms to prevent a repetition of recent events; if the right fix can be applied, all should work properly again.

But economic historians and others with a long-term perspective might well disagree with the view of the 2008 banking crisis as a one-off event.

They might point out that banking regularly runs into problems; in the UK, there was a major banking crisis in the early 70s, with at least one major bank being technically insolvent and there has since been debt problems with bank lending to Latin America and property developers in the 80s and 90s.

James Bevan, chief executive at charity fund manager CCLA, recently described banks as inherently risky institutions and said we should expect a major blow-up every 25 years on average.

It may take time for this view to permeate into investor thinking and it is not entirely comfortable for many to take onboard, but perhaps investors need to take more account of bank counterparty risks when assessing where and how to invest.

Meanwhile many pension funds that felt happy to be holding equities in May 2008 probably feel a lot less confident now, even with the recent market recovery.

In many cases, long-term funding plans for retail and institutional investors assume an equity return of around 7% a year.

But given equity returns over the last 10 years, some are starting to question the validity of this assumption.

In the perspective of recent market upheavals, more investors are likely to question how secure the financial system currently is and what sort of returns they should expect to receive from equities as an asset class.