Accelerating into the Abyss: Financial Dependence and the Great Depression

Mrdjan M. Mladjan
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引用次数: 12

Abstract

This paper gives new evidence for the importance of bank failures during the Great Depression. Using a panel of state-industry observations from the interwar years, I demonstrate that financially dependent industries saw bigger declines in output relative to their peers. This differential is largest in states that were affected the most by banking failures. The main findings are obtained using the standard indicator of financial dependence for the purposes of investment, pioneered by Rajan and Zingales (1998). I complement them by using a novel measure of financial dependence, based on hand-collected data from the 1920s and specifically designed for periods of severe recessions when investment is not a priority. This is inverse interest cover which describes different channels by which bank failures reduce output compared to the standard measure of dependence. I furthermore find evidence that bank failures reduced output in several more ways than by causing a decline in loan supply. Particularly important was the reduction in demand for durables caused by uncertainty created by local bank failures. To establish causality, I first use Altonji et al. (2005) ratios to exclude omitted variable bias and then instrument bank failures with newly-proposed indicators of predetermined vulnerability of each state’s banking system. My findings show that bank failures can explain a third of decline in manufacturing output during the Great Depression.
加速走向深渊:金融依赖与大萧条
本文为大萧条时期银行倒闭的重要性提供了新的证据。我利用一组两次世界大战期间的国有工业观察数据,证明了财政依赖的行业相对于同行的产出下降幅度更大。在受银行倒闭影响最大的州,这种差异最大。主要研究结果是使用Rajan和Zingales(1998)首创的用于投资目的的财务依赖标准指标获得的。我还使用了一种衡量金融依赖程度的新方法作为补充,该方法基于20世纪20年代手工收集的数据,专门为投资不受重视的严重衰退时期设计。这是逆利息覆盖,它描述了与依赖的标准衡量标准相比,银行倒闭减少产出的不同渠道。我进一步发现,有证据表明,除了导致贷款供应下降外,银行倒闭还在其他几个方面降低了产出。尤其重要的是,当地银行倒闭造成的不确定性导致耐用品需求减少。为了建立因果关系,我首先使用Altonji等人(2005)的比率来排除遗漏的变量偏差,然后使用新提出的各州银行体系预定脆弱性指标来排除工具银行的失败。我的研究结果表明,银行倒闭可以解释大萧条期间三分之一的制造业产出下降。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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