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Are Branch Banks Better Survivors? Evidence from the Depression Era
Author(s) -
Carlson Mark
Publication year - 2004
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/cbh048
Subject(s) - unit (ring theory) , depression (economics) , economics , great depression , too big to fail , financial system , monetary economics , actuarial science , financial crisis , political science , keynesian economics , psychology , mathematics education , law
It is widely argued in the literature on the Great Depression that the prevalence of unit banks aggravated the problem of financial instability that afflicted the United States. This article tests the theory that more widespread branch banking would have reduced financial turbulence by examining the survival of individual branch and unit banks. Results indicate that instead of being more likely to survive, branch banks were more likely to fail. Further investigation suggests that this higher failure rate occurred because branch banks systematically held riskier portfolios than unit banks.