The great banks' depression : deposit withdrawals in the German crisis of 1931

Schnabel, Isabel

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URN: urn:nbn:de:bsz:180-madoc-27728
Document Type: Working paper
Year of publication: 2003
The title of a journal, publication series: None
Publication language: English
Institution: School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series: Sonderforschungsbereich 504 > Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung (Laufzeit 1997 - 2008)
Subject: 330 Economics
Classification: JEL: E5 N24 C34 G21 ,
Subject headings (SWD): Deutschland , Bankenkrise , Bankenliquidität , Moral Hazard , Geschichte
Keywords (English): Deposit withdrawals , bank failures , "too big to fail" , Great Depression
Abstract: Using monthly balance-sheet data of all major German credit banks, we analyze deposit withdrawals and bank failures in the German banking and currency crisis of 1931. We show that deposit withdrawals were related to indicators of banks' liquidity and solvency and were hence not simply the consequence of a run on the German currency. We find no evidence that branch banks were more stable than unit banks. Finally, we show that larger banks had a lower probability of failure, were more likely to be bailed out by the public authorities, and were granted preferential access to the Reichsbank's discount window. We interpret these results as evidence for a 'too-big-to-fail' phenomenon.
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