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Clearinghouse Loan Certificates as a Lender of Last Resort

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Listed:
  • Christopher Hoag

    (Department of Economics, Trinity College)

Abstract

Looking across multiple panics of the nineteenth century, this paper treats borrowing of clearinghouse loan certificates as borrowing from a lender of last resort. We evaluate individual bank use of clearinghouse loan certificates in New York City using bank balance sheet data. Bank capital ratios do not predict positive net borrowing. Lower pre-panic reserve ratios increased the probability of positive net borrowing of loan certificates.

Suggested Citation

  • Christopher Hoag, 2015. "Clearinghouse Loan Certificates as a Lender of Last Resort," Working Papers 1503, Trinity College, Department of Economics, revised Jun 2015.
    • Handle: RePEc:tri:wpaper:1503
    as

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    File URL: http://www3.trincoll.edu/repec/WorkingPapers2015/WP15-03.pdf
    File Function: Third version, 2015
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    References listed on IDEAS

    as
    1. Peristiani, Stavros, 1994. "An empirical investigation of the determinants of discount window borrowing: a disaggregate analysis," Journal of Banking & Finance, Elsevier, vol. 18(1), pages 183-197, January.
    2. Tetsuji Okazaki, 2006. "Micro-aspects of Monetary Policy in Pre-war Japan: Lender of Last Resort and Selection of Banks," CIRJE F-Series CIRJE-F-398, CIRJE, Faculty of Economics, University of Tokyo.
    3. A. Piatt Andrew, 1908. "Substitutes for Cash in the Panic of 1907," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 22(4), pages 497-516.
    4. Jacobson, Margaret M. & Tallman, Ellis W., 2015. "Liquidity provision during the crisis of 1914: Private and public sources," Journal of Financial Stability, Elsevier, vol. 17(C), pages 22-34.
    5. Christopher Hoag, 2012. "Aldrich-Vreeland Emergency Currency as a Lender of Last Resort," Journal of Economic Insight, Missouri Valley Economic Association, vol. 38(1), pages 73-88.
    6. Hoag, Christopher, 2005. "Deposit drains on "interest-paying" banks before financial crises," Explorations in Economic History, Elsevier, vol. 42(4), pages 567-585, October.
    7. Hanes, Christopher & Rhode, Paul W., 2013. "Harvests and Financial Crises in Gold Standard America," The Journal of Economic History, Cambridge University Press, vol. 73(1), pages 201-246, March.
    8. Stavros Peristiani, 1998. "The Growing Reluctance To Borrow At The Discount Window: An Empirical Investigation," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 611-620, November.
    9. Timberlake, Richard H, Jr, 1984. "The Central Banking Role of Clearinghouse Associations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 16(1), pages 1-15, February.
    10. Butkiewicz James L., 1995. "The Impact of a Lender of Last Resort during the Great Depression: The Case of the Reconstruction Finance Corporation," Explorations in Economic History, Elsevier, vol. 32(2), pages 197-216, April.
    11. Gorton, Gary & Mullineaux, Donald J, 1987. "The Joint Production of Confidence: Endogenous Regulation and Nineteenth Century Commercial-Bank Clearinghouses," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 19(4), pages 457-468, November.
    12. Tallman, Ellis W. & Moen, Jon R., 2012. "Liquidity creation without a central bank: Clearing house loan certificates in the banking panic of 1907," Journal of Financial Stability, Elsevier, vol. 8(4), pages 277-291.
    13. Gorton, Gary, 1985. "Clearinghouses and the Origin of Central Banking in the United States," The Journal of Economic History, Cambridge University Press, vol. 45(2), pages 277-283, June.
    14. Okazaki, Tetsuji, 2007. "Micro-aspects of monetary policy: Lender of Last Resort and selection of banks in pre-war Japan," Explorations in Economic History, Elsevier, vol. 44(4), pages 657-679, October.
    15. Joseph Mason, 2001. "Do Lender of Last Resort Policies Matter? The Effects of Reconstruction Finance Corporation Assistance to Banks During the Great Depression," Journal of Financial Services Research, Springer;Western Finance Association, vol. 20(1), pages 77-95, September.
    16. Jon R. Moen & Ellis W. Tallman, 2007. "Liquidity creation without a lender of last resort: clearinghouse loan certificates in the Banking Panic of 1907," FRB Atlanta Working Paper 2006-23, Federal Reserve Bank of Atlanta.
    17. Jon R. Moen & Ellis W. Tallman, 2013. "Close but not a central bank: The New York Clearing House and issues of clearing house loan certificates," Working Papers (Old Series) 1308, Federal Reserve Bank of Cleveland.
    18. Wicker,Elmus, 2000. "Banking Panics of the Gilded Age," Cambridge Books, Cambridge University Press, number 9780521770231.
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    Cited by:

    1. Christopher Hoag, 2015. "Clearinghouse Loan Certificates as Interbank Loans," Working Papers 1504, Trinity College, Department of Economics, revised Jun 2015.

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    More about this item

    Keywords

    bank; lender of last resort; clearinghouse; loan certificates;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913

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