Liquidity creation without a lender of last resort: clearing house loan certificates in the Banking Panic of 1907

Jon Moen () and Ellis Tallman

No 1010, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: We employ a new data set comprised of disaggregate figures on clearing house loan certificate issues in New York City to document how the dominant national banks were crucial providers of temporary liquidity during the Panic of 1907. Clearing house loan certificates were essentially ?bridge loans? arranged between clearing house members. They enabled and were issued in anticipation of gold imports, which took a few weeks to arrive. The large, New York City national banks acted as private liquidity providers by requesting (and the New York Clearing House issuing) a volume of clearing house loan certificates beyond their own immediate liquidity needs, in accord with their role as central reserve city banks in the national banking system.

Keywords: Financial crises - United States; lenders of last resort (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-his and nep-mon
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Related works:
Journal Article: Liquidity creation without a central bank: Clearing house loan certificates in the banking panic of 1907 (2012)
Working Paper: Liquidity creation without a lender of last resort: clearinghouse loan certificates in the Banking Panic of 1907 (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwp:1010

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DOI: 10.26509/frbc-wp-201010

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