American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Loans for the "Little Fellow": Credit, Crisis, and Recovery in the Great Depression
American Economic Review
vol. 114,
no. 12, December 2024
(pp. 3905–43)
Abstract
This paper identifies how bank branching benefited local economies during the Great Depression. Using archival data and narrative evidence, I show how Bank of America's branch network in 1930s California created an internal capital market that diversified away local liquidity shortfalls, allowing the bank to maintain 49 percent higher credit growth from 1929 to 1933 than competing banks. The bank's presence mitigated cites' property value contractions and strengthened their recovery through 1940. Linked individual data show that the bank's proximity to workers hastened the transition from agricultural employment to human-capital–intensive sectors in the 1930s, generating structural change and higher wages.Citation
Quincy, Sarah. 2024. "Loans for the "Little Fellow": Credit, Crisis, and Recovery in the Great Depression." American Economic Review, 114 (12): 3905–43. DOI: 10.1257/aer.20211523Additional Materials
JEL Classification
- E32 Business Fluctuations; Cycles
- G01 Financial Crises
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- N12 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: U.S.; Canada: 1913-
- N22 Economic History: Financial Markets and Institutions: U.S.; Canada: 1913-
- N92 Regional and Urban History: U.S.; Canada: 1913-
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics