Are banks really special? New evidence from the FDIC-induced failure of healthy banks

Adam Ashcraft ()

No 176, Staff Reports from Federal Reserve Bank of New York

Abstract: The FDIC used cross-guarantees to close thirty-eight subsidiaries of First Republic Bank Corporation in 1988 and eighteen subsidiaries of First City Bancorporation in 1992 when lead banks from each of these Texas-based bank holding companies were declared insolvent. I use this exogenous failure of otherwise healthy subsidiary banks as a natural experiment for studying the impact of bank failure on local-area real economic activity. I find that the closings of the subsidiaries were associated with a significant decline in bank lending that led to a permanent reduction in real county income of about 3 percent.

Keywords: bank failures; cross-guarantee; uniqueness of banks (search for similar items in EconPapers)
JEL-codes: E5 G18 G33 (search for similar items in EconPapers)
Date: 2003-12-01
New Economics Papers: this item is included in nep-ifn
Note: For a published version of this report, see Adam B. Ashcraft, "Are Banks Really Special? New Evidence from the FDIC-Induced Failure of Healthy Banks," American Economic Review 95, no. 5 (December 2005): 1712-30.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr176.html (text/html)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr176.pdf (application/pdf)

Related works:
Journal Article: Are Banks Really Special? New Evidence from the FDIC-Induced Failure of Healthy Banks (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednsr:176

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Staff Reports from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().