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Categories and causes of bank distress during the great depression, 1929–1933: The illiquidity versus insolvency debate revisited

Categories and causes of bank distress during the great depression, 1929–1933: The illiquidity versus insolvency debate revisited

Authors :
Richardson, Gary
Source :
Explorations in Economic History. Oct2007, Vol. 44 Issue 4, p588-607. 20p.
Publication Year :
2007

Abstract

Abstract: During the contraction from 1929 to 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 analyzes chronological patterns in aggregate series constructed from that data. The analysis demonstrates both illiquidity and insolvency were substantial sources of bank distress. Periods of heightened distress were correlated with periods of increased illiquidity. 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. [Copyright &y& Elsevier]

Subjects

Subjects :
*BANKING industry
*BANKRUPTCY

Details

Language :
English
ISSN :
00144983
Volume :
44
Issue :
4
Database :
Academic Search Index
Journal :
Explorations in Economic History
Publication Type :
Academic Journal
Accession number :
26417584
Full Text :
https://doi.org/10.1016/j.eeh.2007.01.001