Banking Panics During the Great Depression
Sandy Liu
The Relationship between Reconstruction Finance Corporation Lending and Bank Failures: An Exploration
The Reconstruction Finance Corporation was a public agency created in 1932 to restore liquidity to the banking system during the banking panics of the Great Depression. This study explores the correlation between RFC loans and bank failures in Alabama, Mississippi, and Tennessee in RFC’s first year of operation via a probit model that estimates the probability of not failing. The data used in the model originated from the 1932 edition of Rand McNally’s Banker’s Directory and various articles from the historical archives of the New York Times. The results show that receiving a loan from the RFC is negatively correlated with the probability of not failing; however, this result is open to multiple interpretations due to the characteristics of certain variables, particularly the endogeneity of the RFC loan recipient variable.
Brief overview of my project
Summer 2009 SURP Proposal
Symposium Poster 2008
The Reconstruction Finance Corporation was a public agency created in 1932 to restore liquidity to the banking system during the banking panics of the Great Depression. This study explores the correlation between RFC loans and bank failures in Alabama, Mississippi, and Tennessee in RFC’s first year of operation via a probit model that estimates the probability of not failing. The data used in the model originated from the 1932 edition of Rand McNally’s Banker’s Directory and various articles from the historical archives of the New York Times. The results show that receiving a loan from the RFC is negatively correlated with the probability of not failing; however, this result is open to multiple interpretations due to the characteristics of certain variables, particularly the endogeneity of the RFC loan recipient variable.
Brief overview of my project
Summer 2009 SURP Proposal
Symposium Poster 2008
