Search Results

Showing results 1 to 10 of approximately 15.

(refine search)
SORT BY: PREVIOUS / NEXT
Jel Classification:N21 

Working Paper
Intermediary Asset Pricing during the National Banking Era

Financial intermediary balance sheets matter for asset returns even when these intermediaries do not directly participate in the relevant asset markets. During the National Banking Era, liquidity conditions for the New York Clearinghouse (NYCH) banks forecast excess returns for stocks, bonds, and currencies. The NYCH banks had little to no direct participation in these markets; their main link to these markets was through securities financing. Liquidity conditions affect asset prices through the credit growth of the NYCH banks, which shapes marginal investors' discount rates. I use ...
International Finance Discussion Papers , Paper 1302

Journal Article
Furnishing an “Elastic Currency”: The Founding of the Fed and the Liquidity of the U.S. Banking System

This article examines how the U.S. banking system responded to the founding of the Federal Reserve System (Fed) in 1914. The Fed was established to bring an end to the frequent crises that plagued the U.S. banking system, which reform proponents attributed to the nation?s ?inelastic? currency stock and dependence on interbank relationships to allocate liquidity and operate the payments system. Reform advocates noted that banking panics tended to occur at times of the year when the demands for currency and bank loans were normally at seasonal peaks and money markets were at their tightest. ...
Review , Volume 100 , Issue 1 , Pages 17-44

Working Paper
Corporate Governance and Risk Management at Unprotected Banks: National Banks in the 1890s

Managers' incentives may conflict with those of shareholders or creditors, particularly at leveraged, opaque banks. Bankers may abuse their control rights to give themselves excessive salaries, favored access to credit, or to take excessive risks that benefit themselves at the expense of depositors. Banks must design contracting and governance structures that sufficiently resolve agency problems so that they can attract funding from outside shareholders and depositors. We examine banks from the 1890s, a period when there were no distortions from deposit insurance or government interventions ...
Finance and Economics Discussion Series , Paper 2014-08

Working Paper
The Transmission of the Financial Crisis in 1907: An Empirical Investigation

Using an extensive high-frequency data set, we investigate the transmission of financial crisis specifically focusing on the Panic of 1907, the final severe panic of the National Banking Era (1863-1913). We trace the transmission of the crisis from New York City trust companies to the New York City national banks through direct and indirect interconnections. Trust companies held cash balances at national banks, and these balances were liquidated as trust companies suffered depositor runs. Secondly, trust companies and national banks were notable creditors to the New York Stock Exchange; when ...
Working Papers (Old Series) , Paper 1409

Working Paper
How Did Pre-Fed Banking Panics End?

How did pre-Fed banking crises end? How did depositors? beliefs change? During the National Banking Era, 1863-1914, banks responded to the severe panics by suspending convertibility; that is, they refused to exchange cash for their liabilities (checking accounts). At the start of the suspension period, the private clearing houses cut off bank-specific information. Member banks were legally united into a single entity by the issuance of emergency loan certificates, a joint liability. A new market for certified checks opened, pricing the risk of clearing house failure. Certified checks traded ...
Working Papers (Old Series) , Paper 1603

Working Paper
Outside Lending in the NYC Call Loan Market

Before the Panic of 1907 the large New York City banks were able to maintain the call loan market?s liquidity during panics, but the rise in outside lending by trust companies and interior banks in the decade leading up the panic weakened the influence of the large banks. Creating a reliable source of liquidity and reserves external to the financial market like a central bank became obvious after the panic. The lack of a lender of last resort for investment banks engaged in bank-like activities during the crisis of 2007-09 revealed a similar need for an external liquidity source.
Working Papers (Old Series) , Paper 1408

Working Paper
Restoring confidence in troubled financial institutions after a financial crisis

After an unprecedented number of banks suspended operations in the during Panic of 1893, the head regulator of banks chartered by the United States government allowed about 100 banks to reopen after certifying their solvency. We evaluate whether actions by bank owners to change management, contract with depositors to extend liability maturity structure, write off bad assets, and/or inject capital affected bank survival and deposit retention. This historical episode is particularly informative because there was no expectation of government intervention. We find that contracting with depositors ...
Finance and Economics Discussion Series , Paper 2022-044

Working Paper
Interbank Networks and the Interregional Transmission of Financial Crises: Evidence from the Panic of 1907

This paper provides quantitative evidence on the interbank network’s role in transmitting the Panic of 1907 across the United States. Originating in a few New York City banks and trust companies, the panic led to payment suspensions and emergency currency issuance in many cities. Data on the universe of correspondent relationships shows that i) suspensions were more likely in cities whose banks had closer ties to New York, ii) banks with correspondents at the Panic’s center were more likely to close, and iii) banks responded to the panic by rearranging their correspondent relationships, ...
Working Papers , Paper 2022-020

Working Paper
Did the Founding of the Federal Reserve Affect the Vulnerability of the Interbank System to Systemic Risk?

As a result of legal restrictions on branch banking, an extensive interbank system developed in the United States during the 19th century to facilitate interregional payments and flows of liquidity and credit. Vast sums moved through the interbank system to meet seasonal and other demands, but the system also transmitted shocks during banking panics. The Federal Reserve was established in 1914 to reduce reliance on the interbank market and correct other defects that caused banking system instability. Drawing on recent theoretical work on interbank networks, we examine how the Fed?s ...
Finance and Economics Discussion Series , Paper 2016-059

Working Paper
Liquidity Requirements, Free-Riding, and the Implications for Financial Stability Evidence from the Early 1900s

Maintaining sufficient liquidity in the financial system is vital for financial stability. However, since returns on liquid assets are typically low, individual financial institutions may seek to hold fewer such assets, especially if they believe they can rely on other institutions for liquidity support. We examine whether state banks in the early 1900s took advantage of relatively high cash balances maintained by national banks, due to reserve requirements, to hold less cash themselves. We find that state banks did hold less cash in places where both state legal requirements were lower and ...
Finance and Economics Discussion Series , Paper 2018-018

FILTER BY year

FILTER BY Content Type

FILTER BY Author

FILTER BY Jel Classification

G21 9 items

E58 7 items

E44 6 items

N22 6 items

N11 5 items

show more (12)

FILTER BY Keywords

banking panics 7 items

contagion 5 items

interbank networks 5 items

Federal Reserve System 4 items

bank closures 3 items

National Banking system 2 items

show more (57)

PREVIOUS / NEXT