The Great Banks` Depression - Deposit Withdrawals in the German Crisis of 1931
Using monthly balance-sheet data of all major German credit banks, we analyze deposit withdrawals and bank failures in the German banking and currency crisis of 1931. We show that deposit withdrawals were related to indicators of banks' liquidity and solvency and were hence not simply the consequence of a run on the German currency. We find no evidence that branch banks were more stable than unit banks. Finally, we show that larger banks had a lower probability of failure, were more likely to be bailed out by the public authorities, and were granted preferential access to the Reichsbank's discount window. We interpret these results as evidence for a 'too-big-to-fail' phenomenon.
|Date of creation:||11 Dec 2002|
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|Note:||I would like to thank Reinhold Schnabel for very helpful discussions in the early stages of this project. Moreover, I thank Jochen Bigus, Christoph Buchheim, Mark Carlson, Martin Hellwig, Hans-Joachim Voth, David Wheelock and the participants of the Annual Meeting of the Cliometric Society in Raleigh, the Banking Workshop in Muenster, the Annual Meeting of the European Economic Association in Stockholm, the Annual Meeting of the Economic History Association in Nashville, the Annual Meeting of the Verein fuer Socialpolitik in Zuerich as well as seminar participants at Pompeu Fabra and the University of Mannheim for useful comments and suggestions.|
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- Charles W. Calomiris & Joseph R. Mason, 2000.
"Causes of U.S. Bank Distress During the Depression,"
NBER Working Papers
7919, National Bureau of Economic Research, Inc.
- Charles W. Calomiris & Joseph R. Mason, 2001. "Causes of U.S. bank distress during the depression," Proceedings 714, Federal Reserve Bank of Chicago.
- Mark Carlson, 2004.
"Are Branch Banks Better Survivors? Evidence from the Depression Era,"
Western Economic Association International, vol. 42(1), pages 111-126, January.
- Mark A. Carlson, 2001. "Are branch banks better survivors? Evidence from the Depression era," Finance and Economics Discussion Series 2001-51, Board of Governors of the Federal Reserve System (U.S.).
- Calomiris, Charles W & Kahn, Charles M, 1991. "The Role of Demandable Debt in Structuring Optimal Banking Arrangements," American Economic Review, American Economic Association, vol. 81(3), pages 497-513, June.
- Schnabel, Isabel, 2002.
"The German Twin Crisis of 1931,"
Sonderforschungsbereich 504 Publications
02-48, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- Peter Temin, 1991. "Lessons from the Great Depression," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262700441, June.
- White, Eugene Nelson, 1984. "A Reinterpretation of the Banking Crisis of 1930," The Journal of Economic History, Cambridge University Press, vol. 44(01), pages 119-138, March.
- Grossman, Richard S., 1994. "The Shoe That Didn't Drop: Explaining Banking Stability During the Great Depression," The Journal of Economic History, Cambridge University Press, vol. 54(03), pages 654-682, September.
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