Bank failures and economic activity: Evidence from the Progressive Era

Marco del Angel, Gary Richardson and Michael Gou

Explorations in Economic History, 2024, vol. 94, issue C

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.

Keywords: Banks; Bank failures; Business failures; Business cycles; Financial intermediation; Banking Crisis; Panic of 1907 (search for similar items in EconPapers)
JEL-codes: E44 G01 G21 N22 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:exehis:v:94:y:2024:i:c:s0014498324000421

DOI: 10.1016/j.eeh.2024.101616

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