Fundamentals, Panics, and Bank Distress During the Depression
American Economic Review
vol. 93,
no. 5, December 2003
(pp. 1615-1647)
Abstract
We assemble bank-level and other data for Fed member banks to model determinants of bank failure. Fundamentals explain bank failure risk well. The first two Friedman-Schwartz crises are not associated with positive unexplained residual failure risk, or increased importance of bank illiquidity for forecasting failure. The third Friedman-Schwartz crisis is more ambiguous, but increased residual failure risk is small in the aggregate. The final crisis (early 1933) saw a large unexplained increase in bank failure risk. Local contagion and illiquidity may have played a role in pre-1933 bank failures, even though those effects were not large in their aggregate impact.Citation
Calomiris, Charles, W., and Joseph R. Mason. 2003. "Fundamentals, Panics, and Bank Distress During the Depression." American Economic Review, 93 (5): 1615-1647. DOI: 10.1257/000282803322655473JEL Classification
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G33 Bankruptcy; Liquidation
- N12 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: U.S.; Canada: 1913-
- N22 Economic History: Financial Markets and Institutions: U.S.; Canada: 1913-
- N92 Regional and Urban History: U.S.; Canada: 1913-