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  • Open Daily: 10am - 10pm
    Alley-side Pickup: 10am - 7pm

    3038 Hennepin Ave Minneapolis, MN
    612-822-4611

Open Daily: 10am - 10pm | Alley-side Pickup: 10am - 7pm
3038 Hennepin Ave Minneapolis, MN
612-822-4611
Finance and Economics Discussion Series: Credit Availability and the Collapse of the Banking Sector in the 1930s

Finance and Economics Discussion Series: Credit Availability and the Collapse of the Banking Sector in the 1930s

Carlson, Mark A.
Rose, Jonathan D.
United States Federal Reserve Board

Paperback

AccountingEconomicsGeneral Political Science

ISBN10: 129705072X
ISBN13: 9781297050725
Publisher: Scholar's Choice
Published: Feb 16 2015
Pages: 50
Weight: 0.19
Height: 0.10 Width: 6.14 Depth: 9.21
Language: English

This paper examines the mechanism through which banking sector distress affects the availability of credit. We use the experience of the United States during the Great Depression, a period of intense bank distress, to conduct our analysis. We utilize previously neglected data from a 1934 survey conducted by the Federal Reserve System of both banks and Chambers of Commerce regarding the availability of credit, and examine which aspects of the banking system collapse affected credit availability as indicated by the survey. A number of scholars have posited different ways that bank distress constrained credit availability and impacted economic activity during the 1930s; however, the empirical evidence regarding these channels is modest. In this study, we find that bank failures had the most dominant impact, but there is also some evidence for the importance of funding constraints from deposit outflows and of protracted deposit liquidation.

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