Stopping contagion with bailouts: Micro-evidence from Pennsylvania bank networks during the panic of 1884

Anderson, Haelim; Bluedorn, John

doi:10.1016/j.jbankfin.2016.11.020

Cited by 10 publications

(6 citation statements)

References 23 publications

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“…Empirical evidence suggests that the national banking system was more robust to mild shocks but more fragile to large shocks to NYC banks. Anderson and Bluedorn (2017) study how the banking system reacted when NYC banks faced mild shocks during the Panic of 1884; they find that financial distress did not reach Pennsylvania. The banking system reacted differently when NYC banks faced major shocks.…”

Section: Bottommentioning

confidence: 99%

“…For instance, Calomiris and Carlson (2017) use detailed information on interbank networks to study the transmission of liquidity risks during the panic of 1893. 4 In addition, Anderson and Bluedorn (2017) use state banking reports to study Pennsylvania state banks' responses during the panic of 1884. 5 We fill this gap by using empirically observed interbank deposit relationships to construct bank networks before and after the NBAs.…”

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confidence: 99%

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Bank Networks and Systemic Risk: Evidence from the National Banking Acts

Anderson

Paddrik

Wang

2019

American Economic Review

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The National Banking Acts (NBAs) of 1863–1864 established rules governing the amounts and locations of interbank deposits, thereby reshaping the bank networks. Using unique data on bank balance sheets and detailed interbank deposits in 1862 and 1867 in Pennsylvania, we study how the NBAs changed the network structure and quantify the effect on financial stability in an interbank network model. We find that the NBAs induced a concentration of interbank deposits at both the city and bank levels, creating systemically important banks. Although the concentration facilitated diversification, contagion would have become more likely when financial center banks faced large shocks. (JEL E44, G01, G21, G28, L14, N21)

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Section: Bottommentioning

confidence: 99%

mentioning

confidence: 99%

Bank Networks and Systemic Risk: Evidence from the National Banking Acts

Anderson

Paddrik

Wang

2019

American Economic Review

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mentioning

confidence: 99%

Bank Networks and Systemic Risk: Evidence from the National Banking Acts

2016

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The National Banking Acts (NBAs) of 1863-1864 established rules governing the amounts and locations of interbank deposits, thereby reshaping the bank networks. Using unique data on bank balance sheets and detailed interbank deposits in 1862 and 1867 in Pennsylvania, we study how the NBAs changed the network structure and quantify the effect on financial stability in an interbank network model. We find that the NBAs induced a concentration of interbank deposits at both the city and bank levels, creating systemically important banks. Although the concentration facilitated diversification, contagion would have become more likely when financial center banks faced large shocks.

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“…Wicker (2000) approves of the actions of the New York Clearing House and argues that the quick intervention of the leadership through its willingness to extend loan certificates to the Metropolitan prevented a local disturbance in the New York money market from spreading nationwide and igniting a national financial crisis. Bluedorn and Anderson (2017) show that Pennsylvania state banks with interbank deposits on New York experienced more defensive changes in their balance sheets than other banks without such exposure.…”

Section: Historymentioning

confidence: 94%

Liquidity and Borrowing from a Lender of Last Resort during the Crisis of 1884

Hoag

2024

IJFBS

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This paper investigates the relation between bank liquidity and borrowing from a lender of last resort on a high frequency basis during a financial crisis. The paper evaluates weekly observations of individual bank borrowing of clearinghouse loan certificates by a panel of New York Clearing House member banks during the crisis of 1884. Naturally, banks with higher reserve ratios borrowed lower amounts, but banks replaced a dollar of reserves with less than a dollar of borrowing from a lender of last resort.

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Stopping contagion with bailouts: Micro-evidence from Pennsylvania bank networks during the panic of 1884

Cited by 10 publications

References 23 publications

Bank Networks and Systemic Risk: Evidence from the National Banking Acts

Bank Networks and Systemic Risk: Evidence from the National Banking Acts

Bank Networks and Systemic Risk: Evidence from the National Banking Acts

Liquidity and Borrowing from a Lender of Last Resort during the Crisis of 1884

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