Bank Supervision, Regulation, and Instability During the Great Depression

Bank Supervision, Regulation, and Instability During the Great Depression

Bank Supervision, Regulation, and Instability During the Great Depression

Even after controlling for local economic conditions, differences in state bank supervision and regulation contribute toward explaining the large variation in state bank suspension rates across U.S. counties during the Great Depression. More stringent capital requirements lowered suspension rates while laws prohibiting branch banking and imposing high reserve requirements had the opposite effect.

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