Network Contagion and Interbank Amplification during the Great Depression

Kris Mitchener and Gary Richardson

No 11164, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Interbank networks amplified the contraction in lending during the Great Depression. Banking panics induced banks in the hinterland to withdraw interbank deposits from Federal Reserve member banks located in reserve and central reserve cities. These correspondent banks responded by curtailing lending to businesses. Between the peak in the summer of 1929 and the banking holiday in the winter of 1933, interbank amplification reduced aggregate lending in the U.S. economy by an estimated 15 percent.

Keywords: Bank networks; Great depression; Banking panics; Contagion; Interbank market (search for similar items in EconPapers)
JEL-codes: E44 G01 G21 L14 N22 (search for similar items in EconPapers)
Date: 2016-03
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Network Contagion and Interbank Amplification during the Great Depression (2019)
Working Paper: Network Contagion and Interbank Amplification during the Great Depression (2016)
Working Paper: Network Contagion and Interbank Amplification during the Great Depression (2016)
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