Library Header Image
LSE Research Online LSE Library Services

What caused Chicago bank failures in the Great Depression? A look at the 1920s

Postel-Vinay, Natacha (2016) What caused Chicago bank failures in the Great Depression? A look at the 1920s. Journal of Economic History, 76 (2). 478 - 519. ISSN 0022-0507

Text - Accepted Version
Download (624kB) | Preview

Identification Number: 10.1017/S002205071600053X


This article reassesses the causes of Chicago state bank failures during the Great Depression by tracking the evolution of their balance sheets in the 1920s. I find that all banks suffered tremendous deposit withdrawals; however banks that failed earlier in the 1930s had invested more in mortgages in the 1920s. The main problem with mortgages was their lack of liquidity, not their quality. Banks heavily engaged in mortgages did not have enough liquid assets to face the withdrawals, and failed. This article thus reasserts the importance of pre-crisis liquidity risk management in preventing bank failures.

Item Type: Article
Official URL:
Additional Information: © 2016 The Economic History Association
Divisions: Economic History
Subjects: F History United States, Canada, Latin America > F001 United States local history
H Social Sciences > HC Economic History and Conditions
Date Deposited: 29 Jun 2018 13:51
Last Modified: 16 May 2024 02:24

Actions (login required)

View Item View Item


Downloads per month over past year

View more statistics