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Are Branch Banks Better Survivors? Evidence from the Depression Era

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  • Mark Carlson

Abstract

It is widely argued in the literature on the Great Depression that the prevalence of unit banks aggravated the problem of financial instability that afflicted the United States. This article tests the theory that more widespread branch banking would have reduced financial turbulence by examining the survival of individual branch and unit banks. Results indicate that instead of being more likely to survive, branch banks were more likely to fail. Further investigation suggests that this higher failure rate occurred because branch banks systematically held riskier portfolios than unit banks. (JEL G21, G28, N22) Copyright 2004, Oxford University Press.

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  • Mark Carlson, 2004. "Are Branch Banks Better Survivors? Evidence from the Depression Era," Economic Inquiry, Western Economic Association International, vol. 42(1), pages 111-126, January.
    • Handle: RePEc:oup:ecinqu:v:42:y:2004:i:1:p:111-126
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    1. Miron, Jeffrey A, 1986. "Financial Panics, the Seasonality of the Nominal Interest Rate, and theFounding of the Fed," American Economic Review, American Economic Association, vol. 76(1), pages 125-140, March.
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    4. Hughes, Joseph P, et al, 1996. "Efficient Banking under Interstate Branching," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 1045-1071, November.
    5. Rebecca Demsetz & Philip E. Strahan, 1995. "Historical patterns and recent changes in the relationship between bank holding company size and risk," Economic Policy Review, Federal Reserve Bank of New York, vol. 1(Jul), pages 13-26.
    6. Wicker,Elmus, 1996. "The Banking Panics of the Great Depression," Cambridge Books, Cambridge University Press, number 9780521562614.
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    8. John Philip Wernette, 1932. "Branch Banking in California and Bank Failures," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 46(2), pages 362-375.
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    More about this item

    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
    • N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-

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