Bank Lending and Deposit Crunches during the Great Depression

Replication Files for <span>Bank Lending and Deposit Crunches during the Great Depression</span><br><br><div>Bank distress was a defining feature of the Great Depression in the United States.</div><div>Most banks, however, weathered the storm and remained in operation throughout the contraction. We show that surviving banks cut lending when depositors withdrew</div><div>funds en masse during panics. This panic-induced decline in lending explains about</div><div>one-third of the reduction in aggregate commercial bank lending between 1929 and</div><div>1932, more than twice as much as attributed to the failure of banks.</div>