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| Title: | | Are banks really special? New evidence from the FDIC-induced failure of healthy banks  |
| Authors: | | Ashcraft, Adam B. |
| Issue Date: | | 2003 |
| Series/Report no.: | | Staff Report, Federal Reserve Bank of New York 176 |
| Abstract: | | The FDIC used cross-guarantees to close thirty-eight subsidiaries of First RepublicBank Corporation in 1988 and eighteen subsidiaries of First City Bancorporation in 1992 when lead banks from each of these Texas-based bank holding companies were declared insolvent. I use this exogenous failure of otherwise healthy subsidiary banks as a natural experiment for studying the impact of bank failure on local-area real economic activity. I find that the closings of the subsidiaries were associated with a significant decline in bank lending that led to a permanent reduction in real county income of about 3 percent. |
| Subjects: | | bank failures, cross-guarantee, uniqueness of banks |
| JEL: | | E5 G18 G33 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Staff Reports, Federal Reserve Bank of New York
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