The Great Depression as a Savings Glut

Victor Degorce and Eric Monnet

Working Papers from CEPII research center

Abstract: New data covering 23 countries reveal that banking crises of the Great Depression coincided with a sharp international increase in deposits at savings institutions and life insurance. Deposits fled from commercial banks to alternative forms of savings. This fuelled a credit crunch since other institutions did not replace bank lending. While asset prices fell, savings held in savings institutions and life insurance companies increased as a share of GDP and in real terms. These findings provide new explanations of the fall in credit and aggregate demand in the 1930s. They illustrate the need to consider nonbank financial institutions when studying banking crises.

Keywords: Great Depression; Banking Crises; Precautionary Savings; Paradox of Thrift; Savings Banks (search for similar items in EconPapers)
JEL-codes: B22 E21 E51 G01 G21 N2 (search for similar items in EconPapers)
Date: 2024-11
New Economics Papers: this item is included in nep-fdg and nep-his
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Related works:
Journal Article: The Great Depression as a Savings Glut (2024)
Working Paper: The Great Depression as a Savings Glut (2024)
Working Paper: The Great Depression as a Savings Glut (2024)
Working Paper: The Great Depression as a Saving Glut (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepidt:2024-14

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