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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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
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:	Date Event June 2016 Published 18 May 2016 Available 21 October 2015 Accepted
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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