Interbank Networks and the Interregional Transmission of Financial Crises: Evidence from the Panic of 1907

This paper provides quantitative evidence on interbank transmission of financial distress in the Panic of 1907 and ensuing recession. Originating in New York City, the panic led to payment suspensions and emergency currency issuance in many cities. Data on the universe of interbank connections show that (1) suspension was more likely in cities whose banks had closer ties to banks at the center of the panic, (2) banks with such links were more likely to close in the panic and recession, and (3) banks responded to the panic by rearranging their correspondent relationships, with implications for network structure.

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Publication Details

Journal
The Journal of Economic History
Published
2024-12-26
DOI
https://doi.org/10.1017/s0022050724000512
Citations
2
Primary Topic
Banking stability, regulation, efficiency
Type
article
Field-Weighted Citation Impact
1.08
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article

Interbank Networks and the Interregional Transmission of Financial Crises: Evidence from the Panic of 1907

Matthew Jaremski, David C. Wheelock
2 citations
The Journal of Economic History
Banking stability, regulation, efficiency
1.08
article

Interbank Networks and the Interregional Transmission of Financial Crises: Evidence from the Panic of 1907

Matthew Jaremski, David C. Wheelock
article en
2 citations

Abstract

This paper provides quantitative evidence on interbank transmission of financial distress in the Panic of 1907 and ensuing recession. Originating in New York City, the panic led to payment suspensions and emergency currency issuance in many cities. Data on the universe of interbank connections show that (1) suspension was more likely in cities whose banks had closer ties to banks at the center of the panic, (2) banks with such links were more likely to close in the panic and recession, and (3) banks responded to the panic by rearranging their correspondent relationships, with implications for network structure.

The Journal of Economic HistoryVol. 85(1)
Utah State University (US), Federal Reserve Bank of St. Louis (US)
Openalex Percentile: Top 19%
Banking stability, regulation, efficiency
1.08
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