Contagious bank runs in the free banking period
AbstractIn the free banking period in the United States, banks issued private banknotes without discretionary restriction of entry into banking. Previous research suggests that specific aspects of the free banking laws account for banks' difficulties, losses to noteholders, and the attendant relatively large number of banks closed. In this paper, we examine the hypothesis that contagious is: 1. the actual sequence of events in two episodes in which numerous banks closed; and 2. a statistical analysis of four episodes. The evidence is consistent with the hypothesis that contagious bank runs account of many of the banks closing. Bankers' use of measures such as restrictions of convertibility and joint guarantees was ad hoc and apparently less effective in this period than after the Civil War.
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Bibliographic InfoPaper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 1989-002.
Date of creation: 1989
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- Michael D. Bordo, 1989.
"The lender of last resort: some historical insights,"
234, Federal Reserve Bank of Chicago.
- Michael D. Bordo, 1990. "The Lender of Last Resort: Some Historical Insights," NBER Working Papers 3011, National Bureau of Economic Research, Inc.
- Michael D. Bordo, 1990. "The lender of last resort : alternative views and historical experience," Economic Review, Federal Reserve Bank of Richmond, issue Jan, pages 18-29.
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