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Who Panics During Panics? Evidence from a Nineteenth Century Savings Bank

  • Cormac O Grada
  • Eugene N. White

Using records of the bank accounts of individual depositors, this paper provides a detailed microeconomic analysis of two nineteenth century banking panics. The panics of 1854 and 1857 were not characterized by an immediate mass panic of depositors and had important time dimensions. We examine depositor behavior using a hazard model. Contagion was the key factor in 1854 but it was not strong enough to create more than a local panic. In contrast, the panic of 1857 began with runs by businessmen and banking sophisticates followed by less informed depositors. Uninformed contagion may have been present, but the evidence suggests that this panic was driven by informational shocks in the face of asymmetric information about the true condition of bank portfolios.

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File URL: http://www.nber.org/papers/w8856.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8856.

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Date of creation: Mar 2002
Date of revision:
Handle: RePEc:nbr:nberwo:8856
Note: DAE ME
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  1. Jeffrey A. Frankel & Sergio L. Schmukler, 1996. "Country Fund Discounts, Asymmetric Information and the Mexican Crisis of 1994: Did Local Residents Turn Pessimistic Before International Investors?," NBER Working Papers 5714, National Bureau of Economic Research, Inc.
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