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Consequences of Bank Distress During the Great Depression

Calomiris, Charles W.; Mason, Joseph R.

The consequences of bank distress for the economy during the Depression remain an area of unresolved controversy. Since John M. Keynes (1931) and Irving Fisher (1933), macroeconomists have argued that bank distress magnified the extent of the economic decline during the Depression. As the intermediaries controlling money and credit, banks were in a special position to transmit their distress to other sectors. But the mechanism through which banking distress mattered for the economy has been hotly contested.

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Published In
American Economic Review
Publisher DOI
https://doi.org/10.1257/000282803322157188
Volume
93
Issue
3
Pages
937 - 947
Academic Units
Business
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