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The Macroeconomic Effects of Banking Crises: Evidence from the United Kingdom, 1750-1938
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DP478: The Macroeconomic Effects of Banking Crises: Evidence from the United Kingdom, 1750-1938Authors
External Authors
Kenny, S
Turner, John D
Related Themes
Macro-Economic Dynamics and PolicyJEL Code
E32, E44, G21, N13, N14, N23, N24
Paper Category Number
478
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 30 or so 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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