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Title:The role of liquidity and implicit guarantees in the German twin crisis of 1931 PDF Logo
Authors:Schnabel, Isabel
Issue Date:2005
Series/Report no.:Preprints of the Max Planck Institute for Research on Collective Goods 2005,5
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 find that deposit withdrawals were driven by the run on the currency, but were also related to banks' liquidity positions; that branch banks were no more stable than unit banks; and that large banks were privileged, being bailed out and receiving preferential access to the discount window. These findings underline the importance of liquidity and implicit guarantees in twin crises, while they question the benefits of branching in such crises.
Subjects:Twin crises
liquidity
implicit guarantees
too big to fail
JEL:G21
E5
N24
C34
Document Type:Working Paper
Appears in Collections:Preprints of the Max Planck Institute for Research on Collective Goods

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