I examine the causal effect of bank failures during the Great
Depression using the quasi-experimental setup of Richardson and
Troost (2009). The experiment is based on Mississippi being divided
into two Federal Reserve districts, which followed different policies
for liquidity provision. This translated into variation in bank failures
across the state. Employing a plant-level sample from the Census
of Manufactures, I find that banking failures had a negative effect
on revenue stemming from a fall in physical output. I find no effect on
employment at the plant-level and a large decline at the county-level.
(JEL E32, E44, G21, G33, N12, N22, N92)
Ziebarth, Nicolas L.
"Identifying the Effects of Bank Failures from a Natural Experiment in Mississippi during the Great Depression."
American Economic Journal: Macroeconomics,
Business Fluctuations; Cycles
Financial Markets and the Macroeconomy
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: U.S.; Canada: 1913-
Economic History: Financial Markets and Institutions: U.S.; Canada: 1913-
Regional and Urban History: U.S.; Canada: 1913-