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Two Depressions, One Banking Collapse


  • Chay Fisher

    (Reserve Bank of Australia)

  • Christopher Kent

    (Reserve Bank of Australia)


The depression of the 1890s in Australia was associated with the collapse of the banking system, whereas problems in the financial system during the 1930s depression were far less severe. This is despite the fact that the initial macroeconomic shock during the 1930s depression was at least as large as that during the 1890s depression. We show that variation in the performance of the financial sector during the two depressions was due to differences in the condition of the financial sector well before each depression. Differences in real external factors and government policies were not sufficient to explain variation in the performance of the financial sector.

Suggested Citation

  • Chay Fisher & Christopher Kent, 1999. "Two Depressions, One Banking Collapse," RBA Research Discussion Papers rdp1999-06, Reserve Bank of Australia.
  • Handle: RePEc:rba:rbardp:rdp1999-06

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    References listed on IDEAS

    1. Kiyotaki, Nobuhiro & Moore, John, 1997. "Credit Cycles," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 211-248, April.
    2. Ben Bernanke & Mark Gertler, 1990. "Financial Fragility and Economic Performance," The Quarterly Journal of Economics, Oxford University Press, vol. 105(1), pages 87-114.
    3. P.D. Jonson & G.R. Stevens, 1983. "The 1930’s and the 1980’s: Some Facts," RBA Research Discussion Papers rdp8303, Reserve Bank of Australia.
    4. David T. Merrett, 1993. "The 1893 Bank Crashes and Monetary Aggregates," RBA Research Discussion Papers rdp9303, Reserve Bank of Australia.
    5. 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.
    6. D.T. Merrett, 1991. "FINANCIAL INSTITUTIONS UNDER PRESSURE: ARE THE RIGHT LESSONS BEING LEARNT FROM THE 1890s?," Economic Papers, The Economic Society of Australia, vol. 10(1), pages 1-10, March.
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    Cited by:

    1. Colin McKenzie, 2006. "Australia's Deflation in the 1890s," Discussion papers 06017, Research Institute of Economy, Trade and Industry (RIETI).
    2. Rochelle Belkar & Lynne Cockerell & Christopher Kent, 2008. "Current Account Deficits: Tha Australian Debate," Central Banking, Analysis, and Economic Policies Book Series,in: Kevin Cowan & Sebastián Edwards & Rodrigo O. Valdés & Norman Loayza (Series Editor) & Klaus Schmidt- (ed.), Current Account and External Financing, edition 1, volume 12, chapter 13, pages 491-535 Central Bank of Chile.
    3. Chris Berg, 2015. "The Curtin-Chifley Origins of the Australian Bank Deposit Guarantee," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 22(1), pages 21-44.
    4. Bryan Fitz-Gibbon & Marianne Gizycki, 2001. "A History of Last-resort Lending and Other Support for Troubled Financial Institutions in Australia," RBA Research Discussion Papers rdp2001-07, Reserve Bank of Australia.
    5. Ellis W. Tallman & Nargis Bharucha, 2000. "Credit crunch or what? Australian banks during the 1986–93 credit cycle," Economic Review, Federal Reserve Bank of Atlanta, issue Q3, pages 13-34.
    6. John Simon, 2003. "Three Australian Asset-price Bubbles," RBA Annual Conference Volume,in: Anthony Richards & Tim Robinson (ed.), Asset Prices and Monetary Policy Reserve Bank of Australia.

    More about this item


    Australian economic depressions; financial instability; banking crises;

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative


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