2007/11/01 by Charles W. Calomiris · 1 citation
Economics, Econometrics and Finance · Business, Management and Accounting · #Banking stability, regulation, efficiency #Global Financial Crisis and Policies #Islamic Finance and Banking Studies
paper · pdf · doi:10.3386/w13597
openalex publication_date 2007/11/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04
Bank failures during banking crises, in theory, can result either from unwarranted depositor withdrawals during events characterized by contagion or panic, or as the result of fundamental bank insolvency. Various views of contagion are described and compared to historical evidence from banking crises, with special emphasis on the U.S. experience during and prior to the Great Depression. Panics or "contagion" played a small role in bank failure, during or before the Great Depression-era distress. Ironically, the government safety net, which was designed to forestall the (overestimated) risks of contagion, seems to have become the primary source of systemic instability in banking in the current era.