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Local banking panics of the 1920s: Identification and determinants

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  • Davison, Lee K.
  • Ramirez, Carlos D.

Abstract

Using a newly discovered dataset of U.S. bank suspensions from 1921 to 1929, we discovered that banking panics were more common in the 1920s than had been believed. Besides identifying panics, we investigate their determinants, finding that local banking panics were more likely when fundamental economic conditions were generally weak and more likely in “overbanked” states; they were less likely in states with deposit insurance or states where a relatively large share of banks belonged to chain banking organizations.

Suggested Citation

  • Davison, Lee K. & Ramirez, Carlos D., 2014. "Local banking panics of the 1920s: Identification and determinants," Journal of Monetary Economics, Elsevier, vol. 66(C), pages 164-177.
  • Handle: RePEc:eee:moneco:v:66:y:2014:i:c:p:164-177
    DOI: 10.1016/j.jmoneco.2014.05.001
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    References listed on IDEAS

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    Cited by:

    1. Kiss, Hubert János & Rodriguez-Lara, Ismael & Rosa-García, Alfonso, 2015. "Kognitív képességek és stratégiai bizonytalanság egy bankrohamkísérletben
      [Cognitive abilities and strategic uncertainty in a bank-run experiment]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 1030-1047.
    2. Jaremski, Matthew & Wheelock, David C., 2019. "The Founding of the Federal Reserve, the Great Depression and the Evolution of the U.S. Interbank Network," Working Papers 2019-2, Federal Reserve Bank of St. Louis, revised 25 Jun 2019.
    3. Kris James Mitchener & Gary Richardson, 2016. "Network Contagion and Interbank Amplification during the Great Depression," NBER Working Papers 22074, National Bureau of Economic Research, Inc.
    4. Hubert Janos Kiss & Ismael Rodriguez-Lara & Alfonso Rosa-Garcia, 2018. "Who runs first to the bank?," IEHAS Discussion Papers 1826, Institute of Economics, Centre for Economic and Regional Studies.
    5. Eduardo Dávila & Ansgar Walther, 2017. "Does Size Matter? Bailouts with Large and Small Banks," NBER Working Papers 24132, National Bureau of Economic Research, Inc.
    6. Colvin, Christopher L., 2017. "Banking on a Religious Divide: Accounting for the Success of the Netherlands' Raiffeisen Cooperatives in the Crisis of the 1920s," The Journal of Economic History, Cambridge University Press, vol. 77(3), pages 866-919, September.
    7. Gergely Horváth & Hubert János Kiss, 2014. "Correlated observations, the law of small numbers and bank runs," IEHAS Discussion Papers 1429, Institute of Economics, Centre for Economic and Regional Studies.

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