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Banks and the Economy: Evidence from the Irish Bank Strike of 1966

Author

Listed:
  • Lennard, Jason

    (London School of Economics)

  • Kenny, Seán

    (University College Cork, Queen's University Centre for Economic History, and Lund University)

  • Horgan, Emma

    (University College Cork)

Abstract

This paper studies a natural experiment in macroeconomic history: the Irish bank strike of 1966, which led to the closure of the major commercial banks for three months. We use synthetic control to estimate how the economy would have evolved had the strike not happened. We find that economic activity slowed, deviating by 6% from the counter- factual path. Narrative evidence not only supports this finding, but also depicts the struggles of households and firms managing a credit crunch, a liquidity shock, and rising transaction costs. This case study highlights the importance of banks for economic performance.

Suggested Citation

  • Lennard, Jason & Kenny, Seán & Horgan, Emma, 2024. "Banks and the Economy: Evidence from the Irish Bank Strike of 1966," Lund Papers in Economic History 256, Lund University, Department of Economic History.
    • Handle: RePEc:hhs:luekhi:0256
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    More about this item

    Keywords

    banks; Ireland; macroeconomy; post-war;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

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