Banking and Financial Crises in United States History: What Guidance can History Offer Policymakers?

Ellis Tallman and Elmus R. Wicker

MPRA Paper from University Library of Munich, Germany

Abstract: This paper assesses the validity of comparisons of the current financial crisis with past crises in the United States. We highlight aspects of two National Banking Era crises (the Panic of 1873 and the Panic of 1907) that are relevant for comparison with the Panic of 2008. In 1873, overinvestment in railroad debt and the default of railroad companies on that debt led to the failure of numerous brokerage houses, an antecedent to the modern investment bank. For the Panic of 1907, panic-related deposit withdrawals centered on the less regulated trust companies, which were less directly linked to the existing lender of last resort, similar to investment banks in 2008. The popular press has made numerous references to the banking crises (there were three main ones) of the Great Depression as relevant comparisons to the present crisis. This paper argues that such an analogy is inaccurate in general.

Keywords: Systemic Risk; Financial Crises; Bank Failures (search for similar items in EconPapers)
JEL-codes: E44 N21 N22 (search for similar items in EconPapers)
Date: 2009-07-31
New Economics Papers: this item is included in nep-ban and nep-his
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Banking and financial crises in United States history: what guidance can history offer policymakers? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:21839

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