Fundamentals, Panics, and Bank Distress During the Depression
- Fundamentals, Panics, and Bank Distress During the Depression
- Calomiris, Charles W.
Mason, Joseph R.
International and Public Affairs
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- American Economic Review
- We assemble bank-level and other data for Fed member banks to model determinants of bank failure. Fundamentals explain bank failure risk well. The first two Friedman-Schwartz crises are not associated with positive unexplained residual failure risk, or increased importance of bank illiquidity for forecasting failure. The third Friedman-Schwartz crisis is more ambiguous, but increased residual failure risk is small in the aggregate. The final crisis (early 1933) saw a large unexplained increase in bank failure risk. Local contagion and illiquidity may have played a role in pre-1933 bank failures, even though those effects were not large in their aggregate impact.
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- Charles W. Calomiris, Joseph R. Mason, 2003, Fundamentals, Panics, and Bank Distress During the Depression, Columbia University Academic Commons, http://hdl.handle.net/10022/AC:P:10880.