Advertisement
Published in:
2016 | OriginalPaper | Chapter
banking crises
Activate our intelligent search to find suitable subject content or patents.
Select sections of text to find matching patents with Artificial Intelligence. powered by
Select sections of text to find additional relevant content using AI-assisted search. powered by
There are two distinct phenomena associated with banking system distress: exogenous shocks that produce insolvency, and depositor withdrawals during ‘panics’. These two contributors to distress often do not coincide. For example, in the rural United States during the 1920s many banks failed, often with high losses to depositors, but those failures were not associated with systemic panics. In 1907, the United States experienced a systemic panic, originating in New York. Although some banks failed in 1907, failures and depositor losses were not much higher than in normal times. As the crisis worsened, banks suspended convertibility until uncertainty about the incidence of the shock had been resolved.