Charles Calomiris

Fundamentals, Panics, and Bank Distress During the Depression

Coauthor(s): Joseph Mason.


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We assemble bank-level and other data for Fed member banks to model determinants of bank failure. Fundamentals explain bank failure risk well. The first two Friedman-Schwartz crises are not associated with positive unexplained residual failure risk, or increased importance of bank illiquidity for forecasting failure. The third Friedman-Schwartz crisis is more ambiguous, but increased residual failure risk is small in the aggregate. The final crisis (early 1933) saw a large unexplained increase in bank failure risk. Local contagion and illiquidity may have played a role in pre-1933 bank failures, even though those effects were not large in their aggregate impact.

The American Economic Review © 2003

Source: American Economic Review
Exact Citation:
Calomiris, Charles, and Joseph Mason. "Fundamentals, Panics, and Bank Distress During the Depression." American Economic Review 93, no. 5 (December 2003): 1615-1647.
Volume: 93
Number: 5
Pages: 1615-1647
Date: 12 2003