Identifying the Effects of Bank Failures from a Natural Experiment in Mississippi during the Great Depression

Nicolas Ziebarth

American Economic Journal: Macroeconomics, 2013, vol. 5, issue 1, 81-101

Abstract: I examine the causal effect of bank failures during the Great Depression using the quasi-experimental setup of Richardson and Troost (2009). The experiment is based on Mississippi being divided into two Federal Reserve districts, which followed different policies for liquidity provision. This translated into variation in bank failures across the state. Employing a plant-level sample from the Census of Manufactures, I find that banking failures had a negative effect on revenue stemming from a fall in physical output. I find no effect on employment at the plant-level and a large decline at the county-level. (JEL E32, E44, G21, G33, N12, N22, N92)

JEL-codes: E32 E44 G21 G33 N12 N22 N92 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/mac.5.1.81
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Citations: View citations in EconPapers (30)

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