Signals and stigmas from banking interventions: Lessons from the Bank Holiday of 1933

Matthew Jaremski, Gary Richardson and Angela Vossmeyer

Journal of Financial Economics, 2025, vol. 163, issue C

Abstract: A nationwide panic forced President Roosevelt to declare a banking holiday in March 1933. The government reopened banks sequentially using a process that sent noisy signals about banks’ health. New microdata reveals that the public responded to these signals. Deposits at rapidly reopened banks rebounded quicker than at comparable or stronger banks that reopened even a few days later. The stigma of late reopening shifted funds from stigmatized to lauded banks and among communities that they served. Despite persisting over a decade, the shift had no measurable impact on the rate at which localities recovered from the Great Depression.

Keywords: Great Depression; Regulation; Bank stability; Stigma; Economic growth (search for similar items in EconPapers)
JEL-codes: E50 G21 N22 (search for similar items in EconPapers)
Date: 2025
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Working Paper: Signals and Stigmas from Banking Interventions: Lessons from the Bank Holiday in 1933 (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:163:y:2025:i:c:s0304405x24001910

DOI: 10.1016/j.jfineco.2024.103968

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