Bank Distress During the Great Contraction, 1929 to 1933, New Data from the Archives of the Board of Governors

Gary Richardson

No 12590, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: During the contraction from 1929 through 1933, the Federal Reserve System tracked changes in the status of all banks operating in the United States and determined the cause of each bank suspension. This essay introduces that hitherto dormant data and analyzes chronological patterns in aggregate series constructed from it. The analysis demonstrates both illiquidity and insolvency were substantial sources of bank distress. Contagion (via correspondent networks and bank runs) propagated the initial banking panics. As the depression deepened and asset values declined, insolvency loomed as the principal threat to depository institutions. These patterns corroborate some and question other conjectures concerning the causes and consequences of the financial crisis during the Great Contraction.

JEL-codes: E42 E5 E65 N1 N12 (search for similar items in EconPapers)
Date: 2006-10
New Economics Papers: this item is included in nep-ban, nep-fdg, nep-his, nep-mac and nep-mon
Note: DAE ME
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Citations: View citations in EconPapers (5)

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