We found a match
Your institution may have rights to this item. Sign in to continue.
- Title
Flight‐to‐safety and the credit crunch: a new history of the banking crises in France during the Great Depression†.
- Authors
Baubeau, Patrice; Monnet, Eric; Riva, Angelo; Ungaro, Stefano
- Abstract
Despite France's importance in the interwar world economy, the scale of the French banking crises of 1930–1 and their consequences have never been fully assessed quantitatively. The lack of banking regulation severely limited the availability of balance sheet data. Using a new dataset of individual balance sheets from more than 300 banks, this article shows that the crises were much more severe than previously thought, although they did not affect the main commercial banks. By reconstructing financial flows, this study shows that the fall in bank credit was mostly driven by a flight‐to‐safety by deposits, from banks to savings institutions and the central bank. The decrease in bank deposits due to bank runs was offset by an increase in deposits with savings institutions, with the central bank, and in cash hoarding, whereas the decrease in bank credit was not offset by an increase in loans from non‐bank financial institutions. In line with the gold standard mentality, cash deposited with savings institutions and the central bank was used to decrease marketable public debt and increase gold reserves, rather than pursuing countercyclical policies. Despite massive capital inflows and rising aggregate money supply, France suffered from a severe, persistent credit crunch.
- Subjects
FRANCE; FINANCIAL crises; HISTORY of the banking industry; CENTRAL banking industry; BANKING regulatory agencies; BANK loans; BANK deposits; FRENCH economic policy; EUROPEAN history, 1918-1945
- Publication
Economic History Review, 2021, Vol 74, Issue 1, p223
- ISSN
0013-0117
- Publication type
Article
- DOI
10.1111/ehr.12972