The Spatial Transmission of U.S. Banking Panics: Evidence From 1870 to 1929

Journal article

We examine the propagation of localised banking panics across the United States using digitised state‐level balance sheet data from National Banks for the 1870–1929 period. Our findings reveal that such panics spill over beyond state borders, triggering moderately persistent credit contractions and liquid asset accumulation. We develop a tractable model illustrating a key trade‐off: while interbank markets—exemplified by the pyramidal reserve structure of the National Banking Era—enable banks to access lower‐cost funding, they also transmit panic effects nationwide.

Authors: Dordal i Carreras, M; Lee, SJ

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Wiley
• Journal: Oxford Bulletin of Economics and Statistics
• Publication date: 2025-07-27
• Acceptance date: 2025-06-26
• DOI: 10.1111/obes.70007
• EISSN: 1468-0084
• ISSN: 0305-9049
• Language: English
• Keywords: panics; interbank markets; spatial propagation