The Macroeconomic Effects of Banking Crises: Evidence from the United Kingdom, 1750–1938

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The Macroeconomic Effects of Banking Crises: Evidence from the United Kingdom, 1750–1938. / Kenny, Sean; Lennard, Jason; Turner, John.

In: Explorations in Economic History, Vol. 79, No. January, 01.01.2021.

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TY - JOUR

T1 - The Macroeconomic Effects of Banking Crises: Evidence from the United Kingdom, 1750–1938

AU - Kenny, Sean

AU - Lennard, Jason

AU - Turner, John

PY - 2021/1/1

Y1 - 2021/1/1

N2 - This paper analyses the macroeconomic effects of banking crises in the United Kingdom between 1750 and 1938. We construct a new annual chronology of banking crises, which we define as episodes of runs and panics combined with significant, geographically-dispersed failures and suspensions. Using a vector autoregression, we find that banking crises are associated with short, sharp and significant drops in economic growth. Using the narrative record to identify plausibly exogenous variation, we show that this finding is robust to potential endogeneity.

AB - This paper analyses the macroeconomic effects of banking crises in the United Kingdom between 1750 and 1938. We construct a new annual chronology of banking crises, which we define as episodes of runs and panics combined with significant, geographically-dispersed failures and suspensions. Using a vector autoregression, we find that banking crises are associated with short, sharp and significant drops in economic growth. Using the narrative record to identify plausibly exogenous variation, we show that this finding is robust to potential endogeneity.

KW - banking crisis

KW - macroeconomy

KW - narrative identification

KW - vector autoregression

KW - United Kingdom

U2 - 10.1016/j.eeh.2020.101357

DO - 10.1016/j.eeh.2020.101357

M3 - Article

VL - 79

JO - Explorations in Economic History

JF - Explorations in Economic History

SN - 0014-4983

IS - January

ER -