Full Citation

Title: 'Loans for the Little Fellow:' Credit, Crisis, and Recovery in the Great Depression

Citation Type: Miscellaneous

Publication Year: 2023

ISBN:

ISSN:

DOI: 10.2139/ssrn.3503590

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PMID:

Abstract: While the effect of credit on having a financial crisis is well-studied, its impact on recovering from the crisis is unresolved. This paper establishes the causal effect of loan supply shocks on the real economy using newly-collected archival data and a novel empirical strategy. The Bank of America was only bank large and geographically diversified enough to weather the Great Depression without shutting lending down completely did not select into better performing cities before the Depression. I find that cities with access to more stable lending from 1929 to 1933 had smaller contractions in economic activity in the same period. While cities with relatively little credit access during the 1930's did not recover to 1929 levels until 1940, Bank of America branched-cities grew during the Depression. Confirming the city-level results, there is a credit availability wage premium in individual-level data, even when controlling for workers' pre-crisis characteristics. These increases in wages are driven by a reallocation towards nontradable employment at the expense of the agricultural sector.

Url: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3503590

Url: https://vanderbilt.app.box.com/s/faerael81d4wjd4hnbv5xlrbm0dmex7d

User Submitted?: No

Authors: Quincy, Sarah

Publisher: Vanderbilt University

Data Collections: IPUMS USA - Ancestry Full Count Data

Topics: Other, Poverty and Welfare, Work, Family, and Time

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