Causes of U.S. Bank Distress During the Depression

This paper provides the first comprehensive econometric analysis of the causes of bank distress during the Depression. We assemble bank-level data for virtually all Fed member banks, and combine those data with county-level, state-level, and national-level economic characteristics to capture cross-sectional and inter-temporal variation in the determinants of bank failure. We construct a model of bank survival duration using these fundamental determinants of bank failure as predictors, and investigate the adequacy of fundamentals for explaining bank failures during alleged episodes of nationwide or regional banking panics. We find that fundamentals explain most of the incidence of bank failure, and argue that contagion' or liquidity crises' were a relatively unimportant influence on bank failure risk prior to 1933. We construct upper-bound measures of the importance of contagion or liquidity crises. At the national level, we find that the first two banking crises identified by Friedman and Schwartz in 1930 and 1931 are not associated with positive unexplained residual failure risk, or with changes in the importance of liquidity measures for forecasting bank failures. The third banking crisis they identify is a more ambiguous case, but even if one views it as a bona fide national liquidity crisis, the size of the contagion effect could not have been very large. The last banking crisis they identify at the beginning of 1933 is associated with important, unexplained increases in bank failure risk. We also investigate the potential role of regional or local contagion and illiquidity crises for promoting bank failure and find some evidence in support of such effects, but these are of small importance in the aggregate. We also investigate the causes of bank distress measured as deposit contraction, using county-level measures of deposits of all commercial banks, and reach similar conclusions about the importance of fundamentals in determining deposit contraction.

Credit card securitization and regulatory arbitrage

This paper explores the motivations and desirability of off-balance-sheet financing of credit card receivables by banks. We explore three related issues: the degree to which securitizations result in the transfer of risk out of the originating bank, the extent to which securitization permits banks to economize on capital by avoiding regulatory minimum capital requirements, and whether banks' avoidance of minimum capital regulation through securitization with implicit recourse has been undesirable from a regulatory standpoint. We show that this intermediation structure could be motivated either by desirable efficient contracting in the presence of asymmetric information or by undesirable safety net abuse. We find that securitization results in some transfer of risk out of the originating bank but that risk remains in the securitizing bank as a result of implicit recourse. Clearly, then, securitization with implicit recourse provides an important means of avoiding minimum capital requirements. We also find, however, that securitizing banks set their capital relative to managed assets according to market perceptions of their risk and seem not to be motivated by maximizing implicit subsidies relating to the government safety net when managing their risk. Thus, the evidence is more consistent with the efficient contracting view of securitization with implicit recourse than with the safety net abuse view. Concerns expressed by policymakers about this form of capital requirement avoidance appear to be overstated. ; Also issued as Payment Cards Center Discussion Paper No. 03-05Credit cards

Contagion and Bank Failures During the Great Depression: The June 1932 Chicago Banking Panic

Studies of pre-Depression banking argue that banking panics resulted from depositor confusion about the incidence of shocks, and that interbank cooperation avoided unwarranted failures. This paper uses individual bank data to address the question of whether solvent Chicago banks failed during the panic asthe result of confusion by depositors. Chicago banks are divided" into three groups: panic failures, failures outside the panic window, and survivors. The characteristics of these three groups are compared to determine whether the banks that failed during the panic were similar ex ante" to those that survived the panic or whether they shared characteristics with other banks that failed. Each category of comparison -- the market-to-book value of equity, the estimated probability or failure or duration of survival the composition of debt, the rates of withdrawal of debt during 1931, and the interest rates paid on debt -- leads to the same conclusion: banks that failed during the panic were similar to others that failed and different from survivors. The special attributes of failing banks were distinguishable at least six months before the panic and were reflected in stock prices, failure probabilities, debt composition, and interest rates at least that far in advance. We conclude that failures during the panic reflected relative weakness in the face of common asset value shock rather than contagion. Other evidence points to cooperation among solvent Chicago banks a key factor in avoiding unwarranted bank failures during the panic.

Resolving the puzzle of the underissuance of national bank notes

The puzzle of underissuance of national bank notes disappears when one disaggregates data, takes account of regulatory limits, and considers differences in opportunity costs. Banks with poor lending opportunities maximized their issuance. Other banks chose to limit issuance. Redemption costs do not explain cross-sectional variation in issuance, and the observed relationship between note issuance and excess reserves is inconsistent with the redemption risk hypothesis of underissuance. National banks did not enter primarily to issue national bank notes, and a “pure arbitrage” strategy of chartering a national bank only to issue national bank notes would not have been profitable. Indeed, new entrants issued less while banks exiting were often maximum issuers. Economies of scope between note issuing and deposit banking included shared overhead costs and the ability to reduce costs of mandatory minimum reserve and capital requirements.Bank notes ; National banks (United States)

Resolving the Puzzle of the Underissuance of National Bank Notes

The puzzle of underissuance of national bank notes disappears when one disaggregates data, takes account of regulatory limits, and considers differences in opportunity costs. Banks with poor lending opportunities maximized their issuance. Other banks chose to limit issuance. Redemption costs do not explain cross-sectional variation in issuance and the observed relationship between note issuance and excess reserves is inconsistent with the redemption risk hypothesis of underissuance. National banks did not enter primarily to issue national bank notes, and a "pure arbitrage" strategy of chartering a national bank only to issue national bank notes would not have been profitable. Indeed, new entrants issued less while banks exiting were often maximum issuers. Economies of scope between note issuing and deposit banking included shared overhead costs and the ability to reduce costs of mandatory minimum reserve and capital requirements.

Extreme Vocality and the Boundaries of Song in the Medieval Crusades (supporting data)

Statistical data on crusade song melodies to support the journal article 'Extreme Vocality and the Boundaries of Song in the Medieval Crusades

Newly discovered 14th-century polyphony in Oxford

Fragments transmitting 14th-century polyphony were discovered in Oxford in 2018. These fragments were from a large book of motets, copied and used in England in the 14th century. A reconstruction of the original source is provided and the notation of the source is analysed. A hypothesis that the book was copied or used in 14th-century Oxford is offered

Did doubling reserve requirements cause the recession of 1937-1938? a microeconomic approach

In 1936-37, the Federal Reserve doubled the reserve requirements imposed on member banks. Ever since, the question of whether the doubling of reserve requirements increased reserve demand and produced a contraction of money and credit, and thereby helped to cause the recession of 1937-1938, has been a matter of controversy. Using microeconomic data to gauge the fundamental reserve demands of Fed member banks, we find that despite being doubled, reserve requirements were not binding on bank reserve demand in 1936 and 1937, and therefore could not have produced a significant contraction in the money multiplier. To the extent that increases in reserve demand occurred from 1935 to 1937, they reflected fundamental changes in the determinants of reserve demand and not changes in reserve requirements.Money supply ; Bank reserves ; Recessions

Changes in zebrafish (Danio rerio) lens crystallin content during development.

PurposeThe roles that crystallin proteins play during lens development are not well understood. Similarities in the adult crystallin composition of mammalian and zebrafish lenses have made the latter a valuable model for examining lens function. In this study, we describe the changing zebrafish lens proteome during development to identify ontogenetic shifts in crystallin expression that may provide insights into age-specific functions.MethodsTwo-dimensional gel electrophoresis and size exclusion chromatography were used to characterize the lens crystallin content of 4.5-day to 27-month-old zebrafish. Protein spots were identified with mass spectrometry and comparisons with previously published proteomic maps, and quantified with densitometry. Constituents of size exclusion chromatography elution peaks were identified with sodium dodecyl sulfate-polyacrylamide gel electrophoresis.ResultsZebrafish lens crystallins were expressed in three ontogenetic patterns, with some crystallins produced at relatively constant levels throughout development, others expressed primarily before 10 weeks of age (βB1-, βA1-, and γN2-crystallins), and a third group primarily after 10 weeks (α-, βB3-, and γS-crystallins). Alpha-crystallins comprised less than 1% of total lens protein in 4.5-day lenses and increased to less than 7% in adult lenses. The developmental period between 6 weeks and 4 months contained the most dramatic shifts in lens crystallin expression.ConclusionsThese data provide the first two-dimensional gel electrophoresis maps of the developing zebrafish lens, with quantification of changing crystallin abundance and visualization of post-translational modification. Results suggest that some crystallins may play stage specific roles during lens development. The low levels of zebrafish lens α-crystallin relative to mammals may be due to the high concentrations of γ-crystallins in this aquatic lens. Similarities with mammalian crystallin expression continue to support the use of the zebrafish as a model for lens crystallin function

Fundamentals, Panics, and Bank Distress During the Depression

We assemble bank-level and other data for Fed member banks to model determinants of bank failure. Fundamentals explain bank failure risk well. The first two Friedman-Schwartz crises are not associated with positive unexplained residual failure risk, or increased importance of bank illiquidity for forecasting failure. The third Friedman-Schwartz crisis is more ambiguous, but increased residual failure risk is small in the aggregate. The final crisis (early 1933) saw a large unexplained increase in bank failure risk. Local contagion and illiquidity may have played a role in pre-1933 bank failures, even though those effects were not large in their aggregate impact