|
Conclusion
Many authors had previously succeeded in showing the vulnerability of banks prior to their failure in the Great Depression. This dissertation showed when Chicago failures started to act in a more risky way and when their vulnerability became more acute. It also demonstrated that the time of failure coincided with a bank’s risky behaviour in the 1920s on the one hand, and with earlier or deeper vulnerability after 1928 on the other. In particular, throughout the 1920s June 1931 failures had a higher real estate loan share than June 1932 failures, and June 1932 failures had a higher share than June 1933 failures. This was true for almost all other relevant variables, whether it be real estate to time deposits, the reserve-deposit ratio, US government bonds to total bonds and stocks or banking house to total assets. For the Great Depression era a turning point in banks’ vulnerability is identifiable before December 1930 at least for early and mid-depression failures. Late (June 1933) failures tend to behave more like survivors. June 1930 is singled out as a critical point for June 1932 failures both in terms of retained earnings and other real estate. For earlier failures, the downturn started even earlier, sometimes as early as December 1928 (especially in other real estate), or December 1929 (for bills payable and rediscounts).
For most cohorts retained earnings peaked around June 1926, sometimes
never going back to this level (at least for the June 1932 cohort). This tends to confirm an important role for real estate activity in 1920s in depression Chicago, on which the last part gave quantitative and anecdotal detail. Although bank size was a non-negligible aspect of failure rates, the analysis of financial ratios shows that this was certainly not the main one.
The issue of the representativeness of the Chicago population of state banks has only been hinted at here and there throughout the thesis, but it is an important one. In order to truly be able to assess, for example, the role of real estate in long-term bank behaviour one would have to compare the findings on Chicago with the rest of the country. This is of course a laborious task and would require that the data used here (and more) be available for the country as a whole, which is far from evident.
Nevertheless, future research on the topic would be of great interest. Moreover, I have only applied mainly graphic analysis to an extremely complex problem, and other forms of analysis, perhaps more rigorous ones, should certainly be tried out. Finally, one thing that has not been done in this study is a comparison of the results of a similar analysis for the banks that failed throughout the 1920s with the current one (for depression failures). This would facilitate a test of the idea that depression failures differed from 1920s failures.
Overall, the dissertation has given shape and emphasis to the theory that banks during the Great Depression failed not because of sudden liquidity problems but because of fundamental weaknesses. It would be difficult, in light of the evidence presented here, to still argue that the main causes of bank failure were “autonomous liquidity shocks” due to a “contagion of fear.”
References:
Alston, Lee J. “Farm Foreclosures in the United States During the Interwar Period” Journal of Economic History 43:4 (December, 1983).
Alston, Lee J., Grove, Wayne A. and David C. Wheelock. “Why Do Banks Fail? Evidence from the 1920s” Explorations in Economic History 31, 409-431 (1994).
Bernanke, Ben. “Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression” American Economic Review 73 (June, 1983).
Bernanke, Ben. Essays on the Great Depression (Princeton: Princeton University Press, 2000).
Bordo, Michael D., Erceg, Christopher J. and Charles L. Evans. “Money, Sticky Wages, and the Great Depression” American Economic Review 90:5 (December 2000).
Bureau of Business Research, College of Commerce and Business Administration. “Investment Banking in Chicago” University of Illinois Bulletin 29:13 (October, 1931).
Calomiris, Charles W. “Financial Factors in the Great Depression” Journal of Economic Perspectives 7:2 (Spring, 1993).
Calomiris, Charles W. and David C. Wheelock. “The Failures of Large Southern Banks During the Great Depression” Columbia University Working Paper (1995).
Calomiris, Charles W. and Berry Wilson. “Bank Capital and Portfolio Management: the 1930s “Capital Crunch” and the Scramble to Shed Risk” Journal of Business 77:3 (2004).
Calomiris, Charles W. and Joseph R. Mason. “Fundamentals, Panics, and Bank Distress During the Depression” American Economic Review 93:5 (December, 2003).
Calomiris, Charles W. and Joseph R. Mason. “Contagion and Bank Failures During the Great Depression: The June 1932 Chicago Banking Panic” American Economic Review 87:5 (December, 1997).
Carlson, Mark. “Are Branch Banks Better Survivors? Evidence from the Depression Era” Federal Reserve Board Working Paper 2001-51 (November, 2001).
Carlson, Mark and Kris James Mitchener. “Branch Banking, Bank Competition, and Financial Stability” Journal of Money, Credit and Banking 38, 1293-1328 (2006).
Chandler, Lester V. American Monetary Policy, 1928-1941 (New York: Harper and Row, 1971).
Cole, Harold L. and Lee E. Ohanian. “The Great Depression in the United States From a Neoclassical Perspective” Federal Reserve Bank of Minneapolis Quarterly Review 23:1 (Winter, 1999).
Cole, Harold L. and Lee E. Ohanian. “The U.S. and U.K. Great Depressions Through the Lens of Neoclassical Growth Theory” American Economic Association Papers and Proceedings 92:2 (May, 2002).
Diamond, Douglas W. and Raghuram G. Rajan. “Liquidity Shortages and Banking Crises” Journal of Finance 60:2 (April, 2005).
Ebell, Monique and Albrecht Ritschl. “Real Origins of the Great Depression: Monopolistic Competition, Union Power, and the American Business Cycle in the 1920s” CEPR Discussion Paper DP6146 (February, 2007).
Eichengreen, Barry. “Viewpoint: Understanding the Great Depression”
Do'stlaringiz bilan baham: |
