Who Panics During Panics? Evidence from a Nineteenth Century Savings Bank / Cormac O. Grada, Eugene N. White.

Format:

Book

Author/Creator:

Grada, Cormac O.

Contributor:

National Bureau of Economic Research.

White, Eugene N.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8856.

NBER working paper series no. w8856

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2002.

Summary:

Using records of the bank accounts of individual depositors, this paper provides a detailed microeconomic analysis of two nineteenth century banking panics. The panics of 1854 and 1857 were not characterized by an immediate mass panic of depositors and had important time dimensions. We examine depositor behavior using a hazard model. Contagion was the key factor in 1854 but it was not strong enough to create more than a local panic. In contrast, the panic of 1857 began with runs by businessmen and banking sophisticates followed by less informed depositors. Uninformed contagion may have been present, but the evidence suggests that this panic was driven by informational shocks in the face of asymmetric information about the true condition of bank portfolios.

Notes:

Print version record

March 2002.