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The great banks' depression : deposit withdrawals in the German crisis of 1931

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  • Schnabel, Isabel

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 show that deposit withdrawals were related to indicators of banks' liquidity and solvency and were hence not simply the consequence of a run on the German currency. We find no evidence that branch banks were more stable than unit banks. Finally, we show that larger banks had a lower probability of failure, were more likely to be bailed out by the public authorities, and were granted preferential access to the Reichsbank's discount window. We interpret these results as evidence for a 'too-big-to-fail' phenomenon.

Suggested Citation

  • Schnabel, Isabel, 2003. "The great banks' depression : deposit withdrawals in the German crisis of 1931," Papers 03-11, Sonderforschungsbreich 504.
    • Handle: RePEc:mnh:spaper:2772
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    References listed on IDEAS

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    Cited by:

    1. Hakenes, Hendrik & Schnabel, Isabel, 2010. "Banks without parachutes: Competitive effects of government bail-out policies," Journal of Financial Stability, Elsevier, vol. 6(3), pages 156-168, September.
    2. Muge Adalet, 2009. "Were Universal Banks More Vulnerable to Banking Failures? Evidence From the 1931 German Banking Crisis," Koç University-TUSIAD Economic Research Forum Working Papers 0911, Koc University-TUSIAD Economic Research Forum.

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    More about this item

    Keywords

    Deposit withdrawals ; bank failures ; too big to fail ; Great Depression;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-
    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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