Bank stocks and Roosevelt’s bank holiday

Roosevelt’s Bank Holiday in March 1933 aimed to halt bank runs and implement licensing for banks. Using a new hand-collected daily database, we examine how bank stocks and bond markets responded to this sweeping regulation. We find that New York City banks saw significant negative abnormal returns, while Chicago banks experienced positive returns, highlighting regional differences in perceptions of the policy. Corporate bond yields fell by 1.4 percentage points, lowering interest rates. Our findings show how markets reacted differently across regions and asset classes to this critical intervention. • New daily OTC bank stock data show varied market reactions to Roosevelt’s Bank Holiday. • New York bank stocks experienced negative abnormal returns, while Chicago gained. • Corporate bond yields fell, signaling restored market confidence.