Full Citation

Title: Banking on the Boom, Tripped by the Bust: Banks and the World War I Agricultural Price Shock

Citation Type: Journal Article

Publication Year: 2020

ISBN:

ISSN: 0022-2879

DOI: 10.1111/jmcb.12725

NSFID:

PMCID:

PMID:

Abstract: How do banks respond to asset booms? This paper examines (i) how U.S. banks responded to the World War I farmland boom; (ii) the impact of regulation; and (iii) how bank closures exacerbated the postwar bust. The boom encouraged new bank formation and balance sheet expansion (especially by new banks). Deposit insurance amplified the impact of rising crop prices on bank portfolios, while higher minimum capital requirements dampened the effects. Banks that responded most aggressively to the asset boom had a higher probability of closing in the bust, and counties with more bank closures experienced larger declines in land prices.

Url: https://onlinelibrary.wiley.com/doi/10.1111/jmcb.12725

User Submitted?: No

Authors: Jaremski, Matthew; Wheelock, David C.

Periodical (Full): Journal of Money, Credit and Banking

Issue: 7

Volume: 52

Pages: 1719-1754

Data Collections: IPUMS NHGIS

Topics: Land Use/Urban Organization, Other

Countries: United States