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The seasonality of banking failures during the late National Banking Era


  • Pere Gomis-Porqueras
  • Bruce Smith


In this paper, we expand previous models with banks and money and explore the consequences of seasonals in the banking system. We find that, when bank failures occur, not all of them have associated large output losses and currency premiums exist. We show that the most important sources of seasonal fluctuations for the banking system are those related to the return on farming activities and the scrapping value of the initial investment. Finally, this model is consistent with the notion that the Treasury is more likely to accommodate the money market in periods where the liquidity needs are higher.

Suggested Citation

  • Pere Gomis-Porqueras & Bruce Smith, 2006. "The seasonality of banking failures during the late National Banking Era," Canadian Journal of Economics, Canadian Economics Association, vol. 39(1), pages 296-319, February.
  • Handle: RePEc:cje:issued:v:39:y:2006:i:1:p:296-319

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    References listed on IDEAS

    1. Bruce Champ & Bruce D. Smith & Stephen D. Williamson, 1996. "Currency Elasticity and Banking Panics: Theory and Evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 29(4), pages 828-864, November.
    2. Milton Friedman & Anna J. Schwartz, 1963. "A Monetary History of the United States, 1867–1960," NBER Books, National Bureau of Economic Research, Inc, number frie63-1, January.
    3. Martin, Antoine, 2004. "Optimal pricing of intraday liquidity," Journal of Monetary Economics, Elsevier, vol. 51(2), pages 401-424, March.
    4. Gomis-Porqueras, Pere & Smith, Bruce D., 2003. "Seasonality And Monetary Policy," Macroeconomic Dynamics, Cambridge University Press, vol. 7(04), pages 477-502, September.
    5. James Peck & Karl Shell, 2003. "Equilibrium Bank Runs," Journal of Political Economy, University of Chicago Press, vol. 111(1), pages 103-123, February.
    6. Satyajit Chatterjee, 1997. "On the optimality of eliminating seasonality in nominal interest rates," Working Papers 97-2, Federal Reserve Bank of Philadelphia.
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    Cited by:

    1. Tarishi Matsuoka & Makoto Watanabe, 2017. "Banking Panics and Liquidity in a Monetary Economy," CESifo Working Paper Series 6722, CESifo Group Munich.

    More about this item

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics


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