Consequences of Bank Distress During the Great Depression

Charles W. Calomiris; Joseph R. Mason

doi:10.1257/000282803322157188

American Economic Review Vol. 93 No. 3 2003

Consequences of Bank Distress During the Great Depression

Charles W. Calomiris¹; Joseph R. Mason²

¹ Graduate School of Business, 601 Uris Hall, Columbia University, 3022 Broadway, New York, NY 10027, and National Bureau of Economic Research. · ² Department of Finance, Drexel University, 3141 Chestnut Street, Philadelphia, PA 19104.

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Abstract

The consequences of bank distress for the economy during the Depression remain an area of unresolved controversy. Since John M. Keynes (1931) and Irving Fisher (1933), macroeconomists have argued that bank distress magnified the extent of the economic decline during the Depression. As the intermediaries controlling money and credit, banks were in a special position to transmit their distress to other sectors. But the mechanism through which banking distress mattered for the economy has been hotly contested.

DOI: 10.1257/000282803322157188
Volume: 93
Issue: 3
Pages: 937-947
Language: en
Sources: bibtex:phds-export.bib openalex crossref

Consequences of Bank Distress During the Great Depression

Abstract

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