Loans for the "Little Fellow": Credit, Crisis, and Recovery in the Great Depression
American Economic Review · 2024 · Volume 114 · Issue 12
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.
Keywords
Business Fluctuations, Cycles, Financial Crises, Banks, Depository Institutions, Micro Finance Institutions, Mortgages, Economic History: Macroeconomics and Monetary Economics, Industrial Structure, Growth, Fluctuations: U.S., Canada: 1913-, Economic History: Financial Markets and Institutions: U.S., Regional and Urban History: U.S., Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration, Regional Labor Markets, Population, Neighborhood Characteristics
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