Liquidity creation without a lender of last resort: clearinghouse loan certificates in the Banking Panic of 1907
AbstractWe employ a new data set comprised of disaggregate figures on clearinghouse loan certificate issues in New York City to document how the dominant national banks were crucial providers of temporary liquidity during the Panic of 1907. Clearinghouse loan certificates were essentially "bridge loans" arranged between clearinghouse members that enabled and were issued in anticipation of monetary gold imports, which took a few weeks to arrive. The large New York City national banks acted as private liquidity providers by requesting (and the New York clearinghouse issuing) a volume of clearinghouse loan certificates beyond their own immediate liquidity needs. While loan certificates were a temporary solution at best to the liquidity crisis in 1907, their issuance allowed the New York banks to serve their role as central reserve city banks in the national banking system.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Atlanta in its series Working Paper with number 2006-23.
Date of creation: 2007
Date of revision:
Other versions of this item:
- Ellis W. Tallman & Jon R. Moen, 2010. "Liquidity creation without a lender of last resort: clearing house loan certificates in the Banking Panic of 1907," Working Paper 1010, Federal Reserve Bank of Cleveland.
- NEP-ALL-2006-12-16 (All new papers)
- NEP-BAN-2006-12-16 (Banking)
- NEP-HIS-2006-12-16 (Business, Economic & Financial History)
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