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What caused Chicago bank failures in the Great Depression? A look at the 1920s
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Postel-Vinay, Natacha (2016) What caused Chicago bank failures in the Great Depression? A look at the 1920s. The Journal of Economic History , 76 (2). pp. 478-519. doi:10.1017/S002205071600053X ISSN 0022-0507.
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Official URL: http://dx.doi.org/10.1017/S002205071600053X
Abstract
This article reassesses the causes of Chicago state bank failures during the Great Depression by tracking the evolution of their balance sheets in the 1920s. I find that all banks suffered tremendous deposit withdrawals; however banks that failed earlier in the 1930s had invested more in mortgages in the 1920s. The main problem with mortgages was their lack of liquidity, not their quality. Banks heavily engaged in mortgages did not have enough liquid assets to face the withdrawals, and failed. This article thus reasserts the importance of pre-crisis liquidity risk management in preventing bank failures.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HC Economic History and Conditions | ||||||||
Divisions: | Faculty of Social Sciences > Economics | ||||||||
Library of Congress Subject Headings (LCSH): | Bank failures -- Chicago, Ill. -- 20th century, Depressions -- 1929 -- Illinois -- Chicago, Banks and banking, Mortgage loans | ||||||||
Journal or Publication Title: | The Journal of Economic History | ||||||||
Publisher: | Cambridge University Press | ||||||||
ISSN: | 0022-0507 | ||||||||
Official Date: | June 2016 | ||||||||
Dates: |
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Volume: | 76 | ||||||||
Number: | 2 | ||||||||
Page Range: | pp. 478-519 | ||||||||
DOI: | 10.1017/S002205071600053X | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 16 August 2016 | ||||||||
Date of first compliant Open Access: | 16 August 2016 | ||||||||
Funder: | Economic and Social Research Council (Great Britain) (ESRC) |
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