Network Contagion and Interbank Amplification during the Great Depression

Kris James Mitchener and Gary Richardson

Journal of Political Economy, 2019, vol. 127, issue 2, 465 - 507

Abstract: Interbank networks amplified the contraction in lending during the Great Depression. Panics induced banks in the hinterland to withdraw interbank deposits from Federal Reserve member banks located in reserve and central reserve cities. These correspondent banks responded by curtailing lending to businesses. Between the peak in the summer of 1929 and the banking holiday in the winter of 1933, interbank amplification reduced aggregate commercial bank lending by an estimated 15 percent.

Date: 2019
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Related works:
Working Paper: Network Contagion and Interbank Amplification during the Great Depression (2016)
Working Paper: Network Contagion and Interbank Amplification during the Great Depression (2016)
Working Paper: Network Contagion and Interbank Amplification during the Great Depression (2016)
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