I thank Barry Eichengreen, Bill English, John James, Joseph Mason, Kris Mitchener, seminar participants at the University of Maryland, Baltimore Campus, and two anonymous referees for valuable comments. I also thank the staff of the Federal Reserve library and the Wisconsin Department of Financial Institutions for generous assistance collecting data. The views presented in this paper are solely those of the author and do not necessarily represent those of the Federal Reserve Board or its staff.
Alternatives for Distressed Banks during the Great Depression
Article first published online: 22 MAR 2010
© 2010 The Ohio State University No claim to original US government works
Journal of Money, Credit and Banking
Volume 42, Issue 2-3, pages 421–441, March - April 2010
How to Cite
CARLSON, M. (2010), Alternatives for Distressed Banks during the Great Depression. Journal of Money, Credit and Banking, 42: 421–441. doi: 10.1111/j.1538-4616.2009.00293.x
- Issue published online: 22 MAR 2010
- Article first published online: 22 MAR 2010
- Received December 18, 2007; and accepted in revised form October 7, 2009.
- Great Depression;
- banking panics;
- distressed banks
Using data on individual banks during the Great Depression, I find that institutions that failed during periods in which failures were especially numerous, such as the banking panics, appear to have been at least as financially sound as banks that were able to pursue alternative resolution strategies, such as merging with another institution or suspending and recapitalizing, during less extreme periods. This result suggests that problems associated with having numerous banks in distress simultaneously during the Depression may have exacerbated the number of banks closed and the economic downturn.