Academic Commons

Articles

Contagion and Bank Failures During the Great Depression: The June 1932 Chicago Banking Panic

Calomiris, Charles W.; Mason, Joseph R.

We examine the social costs of asymmetric-information-induced bank panics in an environment without government deposit insurance. Our case study is the Chicago bank panic of June 1932. We compare the ex ante characteristics of panic failures and panic survivors. Despite temporary confusion about bank asset quality on the part of depositors during the panic, which was associated with widespread depositor runs and bank stock price declines, the panic did not produce significant social costs in terms of failures among solvent banks.

Files

Also Published In

Title
American Economic Review

More About This Work

Academic Units
Business
Published Here
August 10, 2011
Academic Commons provides global access to research and scholarship produced at Columbia University, Barnard College, Teachers College, Union Theological Seminary and Jewish Theological Seminary. Academic Commons is managed by the Columbia University Libraries.