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From a “normal recession” to the “Great Depression”: finding the turning point in Chicago bank portfolios, 1923-1933

By Natacha Postel-Vinay

Abstract

This dissertation analyses the long-term behaviour of bank financial ratios from 1923 to 1933, focusing on a population of 193 Chicago state banks. These banks are divided into earlier and later failure cohorts. The main conclusion is that a turning point in banks’ vulnerability is identifiable before the first banking crises, between the end of 1928 and June 1930. A second, related conclusion is that this upsurge in vulnerability (as expressed by such variables as retained earnings and other real estate) is made even more significant when considering banks’ behaviour in the preceding decade. In almost all cases earlier failures behaved more riskily in the 1920s, which explains their earlier and higher vulnerability at the start of the depression

Topics: HC Economic History and Conditions, HG Finance
Publisher: Department of Economic History, London School of Economics and Political Science
Year: 2011
OAI identifier: oai:eprints.lse.ac.uk:35518
Provided by: LSE Research Online

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