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

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• Dr Natacha Postel-Vinay, University of Warwick
• Monday 19 January 2015, 17:00-18:30
• Darwin College (Seminar Room, No. 1 Newnham Terrace - entrance via Porters Lodge on Silver St).

If you have a question about this talk, please contact Dr Duncan Needham.

This paper reassesses the causes of Chicago bank failures during the Great Depression by tracking the evolution of their balance sheets in the 1920s. I find that all Chicago 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 paper thus reasserts the importance of pre-crisis liquidity risk management in preventing bank failures.

This talk is part of the Financial History Seminar series.

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• AUB_Cambridge Seminars
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• Darwin College (Seminar Room, No. 1 Newnham Terrace - entrance via Porters Lodge on Silver St)
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