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

Kenny, Seán LU ; Lennard, Jason LU and Turner, John D. (2017) In Lund Papers in Economic History: General Issues
Abstract
This paper investigates the macroeconomic effects of UK banking crises over the period 1750 to 1938. We construct a new annual banking crisis series using bank failure rate data, which suggests that the incidence of banking crises was every 32 years. Using our new series and a narrative approach to identify exogenous banking crises, we find that industrial production contracts by 8.2 per cent in the year following a crisis. This finding is robust to a battery of checks, including different VAR specifications, different thresholds for the crisis indicator, and the use of a capital-weighted bank failure rate.
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author
organization
publishing date
type
Working Paper
publication status
published
subject
keywords
banking crisis, bank failures, narrative approach, macroeconomy, United Kingdom, E32, E44, G21, N13, N14, N23, N24
in
Lund Papers in Economic History: General Issues
issue
165
pages
47 pages
publisher
Department of Economic History, Lund University
ISSN
1101-346X
language
English
LU publication?
yes
id
f5c2b347-57a5-4721-90d0-6516ca0210fe
date added to LUP
2017-10-11 09:10:21
date last changed
2017-10-11 09:10:21
@misc{f5c2b347-57a5-4721-90d0-6516ca0210fe,
  abstract     = {This paper investigates the macroeconomic effects of UK banking crises over the period 1750 to 1938. We construct a new annual banking crisis series using bank failure rate data, which suggests that the incidence of banking crises was every 32 years. Using our new series and a narrative approach to identify exogenous banking crises, we find that industrial production contracts by 8.2 per cent in the year following a crisis. This finding is robust to a battery of checks, including different VAR specifications, different thresholds for the crisis indicator, and the use of a capital-weighted bank failure rate.},
  author       = {Kenny, Seán and Lennard, Jason and Turner, John D.},
  issn         = {1101-346X},
  keyword      = {banking crisis,bank failures,narrative approach,macroeconomy,United Kingdom,E32,E44,G21,N13,N14,N23,N24},
  language     = {eng},
  note         = {Working Paper},
  number       = {165},
  pages        = {47},
  publisher    = {Department of Economic History, Lund University},
  series       = {Lund Papers in Economic History: General Issues},
  title        = {The Macroeconomic Effects of Banking Crises : Evidence from the United Kingdom, 1750-1938},
  year         = {2017},
}