Liquidity creation without a lender of last resort: clearing house loan certificates in the Banking Panic of 1907
AbstractWe employ a new data set comprised of disaggregate figures on clearing house 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. Clearing house loan certificates were essentially “bridge loans” arranged between clearing house members. They enabled and were issued in anticipation of 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 Clearing House issuing) a volume of clearing house loan certificates beyond their own immediate liquidity needs, in accord with their role as central reserve city banks in the national banking system.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Cleveland in its series Working Paper with number 1010.
Date of creation: 2010
Date of revision:
Other versions of this item:
- Ellis W. Tallman & Jon R. Moen, 2007. "Liquidity creation without a lender of last resort: clearinghouse loan certificates in the Banking Panic of 1907," Working Paper 2006-23, Federal Reserve Bank of Atlanta.
- NEP-ALL-2010-08-14 (All new papers)
- NEP-HIS-2010-08-14 (Business, Economic & Financial History)
- NEP-MON-2010-08-14 (Monetary Economics)
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