Bank Failures and Economic Activity: Evidence from the Progressive Era

Gary Richardson, Marco Del Angel and Michael Gou

No 32345, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: During the Progressive Era (1900-29), economic growth was rapid but volatile. Boom and busts witnessed the formation and failure of tens of thousands of firms and thousands of banks. This essay uses new data and methods to identify causal links between failures of banks and bankruptcies of firms. Our analysis indicates that bank failures triggered bankruptcies of firms that depended upon banks for ongoing access to commercial credit. Firms that did not depend upon banks for credit did not fail in appreciably larger numbers after banks failed or during financial panics.

JEL-codes: E44 G21 N22 (search for similar items in EconPapers)
Date: 2024-04
New Economics Papers: this item is included in nep-ban, nep-fdg and nep-his
Note: DAE ME
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