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Signals and stigmas from banking interventions: Lessons from the Bank Holiday of 1933

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  • Jaremski, Matthew
  • Richardson, Gary
  • Vossmeyer, Angela

Abstract

A nationwide panic forced President Roosevelt to declare a banking holiday in March 1933. The government reopened banks sequentially using a process that sent noisy signals about banks’ health. New microdata reveals that the public responded to these signals. Deposits at rapidly reopened banks rebounded quicker than at comparable or stronger banks that reopened even a few days later. The stigma of late reopening shifted funds from stigmatized to lauded banks and among communities that they served. Despite persisting over a decade, the shift had no measurable impact on the rate at which localities recovered from the Great Depression.

Suggested Citation

  • Jaremski, Matthew & Richardson, Gary & Vossmeyer, Angela, 2025. "Signals and stigmas from banking interventions: Lessons from the Bank Holiday of 1933," Journal of Financial Economics, Elsevier, vol. 163(C).
    • Handle: RePEc:eee:jfinec:v:163:y:2025:i:c:s0304405x24001910
    DOI: 10.1016/j.jfineco.2024.103968
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    Cited by:

    1. Calomiris, Charles W. & Jaremski, Matthew, 2024. "The puzzling persistence of financial crises: A selective review of 2000 years of evidence," Journal of Financial Intermediation, Elsevier, vol. 58(C).

    More about this item

    Keywords

    Great Depression; Regulation; Bank stability; Stigma; Economic growth;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • 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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