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The Shoe That Didn't Drop: Explaining Banking Stability During the Great Depression

Published online by Cambridge University Press:  03 March 2009

Richard S. Grossman
Richard S. Grossman
Affiliation:
Assistant Professor of Economics, Wesleyan University, Middletown, CT 06459–6067.
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Abstract

This article attempts to account for the exceptional stability exhibited by the banking systems of Britain, Canada, and ten other countries during the Great Depression. It considers three possible explanations of stability—the structure of the commercial banking system, macroeconomic policy and performance, and lender of last resort behavior—employing data from 25 countries across Europe and North America. The results suggest that macroeconomic policy—especially exchange-rate policy—and banking structure, but not lenders of last resort, were systematically responsible for banking stability.

Type
Articles
Information
The Journal of Economic History , Volume 54 , Issue 3 , September 1994 , pp. 654 - 682
Copyright
Copyright © The Economic History Association 1994

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