During the Progressive Era (1900-29), economic growth was rapid but volatile. Boom and busts witnessed the formation and failure of tens of thousands of firms and thousands of banks. This essay uses new data and methods to identify causal links between failures of banks and bankruptcies of firms. Our analysis indicates that bank failures triggered bankruptcies of firms that depended upon banks for ongoing access to commercial credit. Firms that did not depend upon banks for credit did not fail in appreciably larger numbers after banks failed or during financial panics.
Authors
- Acknowledgements & Disclosure
- The authors thank participants in seminars at Stanford, UC Davis, Berkeley, and in the Monetary and Financial History Conference jointly hosted by the Atlanta Fed and Emory University. The authors received financial support from NSF Grant SES- 2214557 while completing this research. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- DOI
- https://doi.org/10.3386/w32345
- Published in
- United States of America
