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Bank failures and economic activity: Evidence from the Progressive Era

Author

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  • del Angel, Marco
  • Richardson, Gary
  • Gou, Michael

Abstract

During the Progressive Era (1900–29), economic growth was rapid but volatile. Boom and busts witnessed the formation and failure of tens of thousands of firms and thousands of banks. This essay uses new data and methods to identify causal links between failures of banks and bankruptcies of firms. Our analysis indicates that bank failures triggered bankruptcies of firms that depended upon banks for ongoing access to commercial credit. Firms that did not depend upon banks for credit did not fail in appreciably larger numbers after banks failed.

Suggested Citation

  • del Angel, Marco & Richardson, Gary & Gou, Michael, 2024. "Bank failures and economic activity: Evidence from the Progressive Era," Explorations in Economic History, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:exehis:v:94:y:2024:i:c:s0014498324000421
    DOI: 10.1016/j.eeh.2024.101616
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    Keywords

    Banks; Bank failures; Business failures; Business cycles; Financial intermediation; Banking Crisis; Panic of 1907;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-

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