Investors piling into the banks this week are backing the emerging recovery, with the monster buying spree underlining growing optimism that the economy will emerge from the pandemic in better shape than previously expected.

The banks have been on a startling run, with the S&P/ASX 200 banks index up 18.3 per cent this week by the close on Thursday as Commonwealth Bank, Westpac, National Australia Bank and ANZ led the sector to a $47.3 billion advance.