1930: First Modern Crisis / Gary Gorton, Toomas Laarits, Tyler Muir.

Author
Gorton, Gary [Browse]
Format
Book
Language
English
Published/​Created
Cambridge, Mass. National Bureau of Economic Research 2019.
Description
1 online resource: illustrations (black and white);

Details

Related name
Series
  • Working Paper Series (National Bureau of Economic Research) no. w25452. [More in this series]
  • NBER working paper series no. w25452
Summary note
Modern financial crises are difficult to explain because they do not always involve bank runs, or the bank runs occur late. For this reason, the first year of the Great Depression, 1930, has remained a puzzle. Industrial production dropped by 20.8 percent despite no nationwide bank run. Using cross-sectional variation in external finance dependence, we demonstrate that banks' decision to not use the discount window and instead cut back lending and invest in safe assets can account for the majority of this decline. In effect, the banks ran on themselves before the crisis became evident.
Notes
January 2019.
Source of description
Print version record
Other title(s)
1930
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