IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/2768.html
   My bibliography  Save this paper

Too Big to Fail: the Panic of 1927

Author

Listed:
  • Yokoyama, Kazuki

Abstract

This paper measures that the Bank of Japan adopted the too-big-to-fail doctrine against the panic of 1927. The results at this paper imply that supported banks had higher closure risk or occupied key positions in the local loan-markets. And this paper finds that the Bank of Japan bailed out solvent banks if they had political importance.

Suggested Citation

  • Yokoyama, Kazuki, 2007. "Too Big to Fail: the Panic of 1927," MPRA Paper 2768, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:2768
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/2768/1/MPRA_paper_2768.pdf
    File Function: original version
    Download Restriction: no
    File URL: https://mpra.ub.uni-muenchen.de/2829/1/MPRA_paper_2829.pdf
    File Function: revised version
    Download Restriction: no
    File URL: https://mpra.ub.uni-muenchen.de/3423/1/MPRA_paper_3423.pdf
    File Function: revised version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Acharya, Viral V. & Yorulmazer, Tanju, 2007. "Too many to fail--An analysis of time-inconsistency in bank closure policies," Journal of Financial Intermediation, Elsevier, vol. 16(1), pages 1-31, 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. 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.
    4. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
    5. Craig O. Brown & I. Serdar Dinç, 2005. "The Politics of Bank Failures: Evidence from Emerging Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(4), pages 1413-1444.
    6. Yabushita Shiro & Inoue Atsushi, 1993. "The Stability of the Japanese Banking System: A Historical Perspective," Journal of the Japanese and International Economies, Elsevier, vol. 7(4), pages 387-407, December.
    7. Okazaki, Tetsuji & Sawada, Michiru & Yokoyama, Kazuki, 2005. "Measuring the Extent and Implications of Director Interlocking in the Prewar Japanese Banking Industry," The Journal of Economic History, Cambridge University Press, vol. 65(4), pages 1082-1115, December.
    8. Takeo Hoshi & Anil Kashyap, 2004. "Corporate Financing and Governance in Japan: The Road to the Future," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582481, December.
    9. Jean-Charles Rochet & Jean Tirole, 1996. "Interbank lending and systemic risk," Proceedings, Board of Governors of the Federal Reserve System (U.S.), pages 733-765.
    10. Okuno-Fujiwara, Masahiro & Okazaki, Tetsuji (ed.), 1999. "The Japanese Economic System and its Historical Origins," OUP Catalogue, Oxford University Press, number 9780198289012.
    11. Carlson, Mark, 2005. "Causes of bank suspensions in the panic of 1893," Explorations in Economic History, Elsevier, vol. 42(1), pages 56-80, January.
    12. Nier, Erlend & Baumann, Ursel, 2006. "Market discipline, disclosure and moral hazard in banking," Journal of Financial Intermediation, Elsevier, vol. 15(3), pages 332-361, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Masami Imai & Tetsuji Okazaki & Michiru Sawada, 2022. "The effects of lender of last resort on financial intermediation during the great depression in Japan [Ginko Hatan gaoyobosu Densenkoka no Bunseki (The analyses of the effect of contagion caused by," European Review of Economic History, European Historical Economics Society, vol. 26(3), pages 448-478.
    2. Lammertjan Dam & Michael Koetter, 2011. "Bank bailouts, interventions, and moral hazard," Proceedings 1131, Federal Reserve Bank of Chicago.
    3. Claudio Borio & Mathias Drehmann, 2011. "Toward an Operational Framework for Financial Stability: “Fuzzy” Measurement and Its Consequences," Central Banking, Analysis, and Economic Policies Book Series, in: Rodrigo Alfaro (ed.),Financial Stability, Monetary Policy, and Central Banking, edition 1, volume 15, chapter 4, pages 063-123, Central Bank of Chile.
    4. Okazaki, Tetsuji & Sawada, Michiru & Yokoyama, Kazuki, 2005. "Measuring the Extent and Implications of Director Interlocking in the Prewar Japanese Banking Industry," The Journal of Economic History, Cambridge University Press, vol. 65(4), pages 1082-1115, December.
    5. Nier, Erlend & Yang, Jing & Yorulmazer, Tanju & Alentorn, Amadeo, 2007. "Network models and financial stability," Journal of Economic Dynamics and Control, Elsevier, vol. 31(6), pages 2033-2060, June.
    6. Viral V. Acharya & Lasse H. Pedersen & Thomas Philippon & Matthew Richardson, 2017. "Measuring Systemic Risk," The Review of Financial Studies, Society for Financial Studies, vol. 30(1), pages 2-47.
    7. Sawada, Michiru, 2010. "Liquidity risk and bank portfolio management in a financial system without deposit insurance: Empirical evidence from prewar Japan," International Review of Economics & Finance, Elsevier, vol. 19(3), pages 392-406, June.
    8. Alan D. Morrison & Ansgar Walther, 2020. "Market Discipline and Systemic Risk," Management Science, INFORMS, vol. 66(2), pages 764-782, February.
    9. Beteto, Danilo Lopomo, 2012. "Government Intervention and Financial Fragility," Risk and Sustainable Management Group Working Papers 156477, University of Queensland, School of Economics.
    10. Marius Andrei Zoican & Lucyna Anna Gornicka, 2014. "Banking Union Optimal Design under Moral Hazard," 2014 Papers pzo33, Job Market Papers.
    11. Hasman, Augusto & Samartín, Margarita, 2023. "Government intervention, linkages and financial fragility," Economic Modelling, Elsevier, vol. 126(C).
    12. Tetsuji Okazaki & Michiru Sawada, 2012. "Interbank networks in prewar Japan: structure and implications," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 21(2), pages 463-506, April.
    13. Fosu, Samuel & Ntim, Collins G. & Coffie, William & Murinde, Victor, 2017. "Bank opacity and risk-taking: Evidence from analysts’ forecasts," Journal of Financial Stability, Elsevier, vol. 33(C), pages 81-95.
    14. Michael G. Arghyrou & Maria Dolores Gadea, 2019. "Private bank deposits and macro/fiscal risk in the euro-area," CESifo Working Paper Series 7532, CESifo.
    15. Calomiris, Charles W. & Flandreau, Marc & Laeven, Luc, 2016. "Political foundations of the lender of last resort: A global historical narrative," Journal of Financial Intermediation, Elsevier, vol. 28(C), pages 48-65.
    16. Martin Brown & Stefan T. Trautmann & Razvan Vlahu, 2017. "Understanding Bank-Run Contagion," Management Science, INFORMS, vol. 63(7), pages 2272-2282, July.
    17. Keister, Todd & Mitkov, Yuliyan, 2023. "Allocating losses: Bail-ins, bailouts and bank regulation," Journal of Economic Theory, Elsevier, vol. 210(C).
    18. Rajkamal Iyer & José-Luis Peydró, 2011. "Interbank Contagion at Work: Evidence from a Natural Experiment," The Review of Financial Studies, Society for Financial Studies, vol. 24(4), pages 1337-1377.
    19. Matej Marinc & Razvan Vlahu, 2011. "The Economic Perspective of Bank Bankruptcy Law," DNB Working Papers 310, Netherlands Central Bank, Research Department.
    20. Marius A. Zoican & Lucyna A. Górnicka, 2013. "Banking Unions: Distorted Incentives and Efficient Bank Resolution," Tinbergen Institute Discussion Papers 13-184/VI, Tinbergen Institute, revised 16 May 2014.

    More about this item

    Keywords

    lender of last resort (LLR); too big to fail; the panic of 1927; bank closure;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:2768. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.