Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216568 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8172
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
The Great Depression is infamous for banking panics, which were a symptomatic of a phenomenon that scholars have labeled a contagion of fear. Using geocoded, microdata on bank distress, we develop metrics that illuminate the incidence of these events and how banks that remained in operation after panics responded. We show that between 1929-32 banking panics reduced lending by 13%, relative to its 1929 value, and the money multiplier and money supply by 36%. The banking panics, in other words, caused about 41% of the decline in bank lending and about nine-tenths of the decline in the money multiplier during the Great Depression.
Subjects: 
banking panics
Great Depression
contagion
monetary deflation
JEL: 
E44
G01
G21
L14
N22
Document Type: 
Working Paper
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