Interbank Markets and Banking Crises: New Evidence on the Establishment and Impact of the Federal Reserve
Mark Carlson and
David Wheelock
No 2015-37, Working Papers from Federal Reserve Bank of St. Louis
Abstract:
This paper examines the impact of the Federal Reserve?s founding on seasonal pressures and contagion risk in the interbank system. Deposit flows among classes of banks were highly seasonal before 1914; amplitude and timing varied regionally. Panics interrupted normal flows as banks throughout the country sought funds from the central money markets simultaneously. Seasonal pressures and contagion risk in the system were lower by the 1920s, when the Fed provided seasonal liquidity and reserves. Panics returned in the 1930s, due in part to shocks from nonmember banks and because the Fed?s decentralized structure hampered a vigorous response to national crises.
Keywords: Federal Reserve; banking crises; banking panics; interbank markets; correspondent banks; contagion; Great Depression (search for similar items in EconPapers)
JEL-codes: E58 G21 N21 N22 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2015-11-01
New Economics Papers: this item is included in nep-his, nep-mac and nep-mon
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Citations: View citations in EconPapers (2)
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Journal Article: Interbank Markets and Banking Crises: New Evidence on the Establishment and Impact of the Federal Reserve (2016) 
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:2015-037
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DOI: 10.20955/wp.2015.037
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