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Back to Good Times: The Real Effects of Credit in Great Depression California.

Record Type:	Electronic resources : Monograph/item
Title/Author:	Back to Good Times: The Real Effects of Credit in Great Depression California./
Author:	Quincy, Sarah Lynn.
Published:	Ann Arbor : ProQuest Dissertations & Theses, : 2019,
Description:	225 p.
Notes:	Source: Dissertations Abstracts International, Volume: 81-04, Section: A.
Contained By:	Dissertations Abstracts International81-04A.
Subject:	Economics. -
Online resource:	http://pqdd.sinica.edu.tw/twdaoapp/servlet/advanced?query=13896259
ISBN:	9781085797672

Back to Good Times: The Real Effects of Credit in Great Depression California.
Quincy, Sarah Lynn.

Back to Good Times: The Real Effects of Credit in Great Depression California. - Ann Arbor : ProQuest Dissertations & Theses, 2019 - 225 p.

Source: Dissertations Abstracts International, Volume: 81-04, Section: A.

Thesis (Ph.D.)--University of California, Davis, 2019.

This item must not be sold to any third party vendors.

In financial crises, like the Great Recession, there are often large output and employment losses from which the economy is unusually slow to recover. To isolate how these disruptions in the banking sector lead to such significant, lingering economic costs, in my dissertation, I use the unique historical setting of Great Depression California. The largest bank in California in 1929, the Bank of America, was the only bank in the country to operate in multiple metropolitan areas in 1929. As a result, it was sufficiently large and geographically-diversified to promote lending to its customers during the 1929 to 1933 banking crisis at a much higher rate than other California banks. In an effort to get, as its 1932 advertising slogan suggested "back to good times," the Bank of America cut lending by 50 percent less than the median California bank. Employing the quasi-random allocation of this bank lending shock, I explore the effect of the Bank of America's presence on Depression-era economic activity, labor markets, human capital attainment, and housing markets using a variety of empirical techniques.I compare the evolution of economic activity in cities in the 1930s based on whether or not they had a Bank of America branch at the onset of the Great Depression in Chapter One. Local credit supply affected local economies both during and after the financial crisis. Cities with Bank of America branches had ten percent smaller declines in economic activity during the crisis itself. Then, economic activity rebounded above pre-crisis levels in 1934 in credit-rich areas and stagnated elsewhere. By 1940, Bank of America-branched cities had grown by 25 percent over the course of the preceding decade, while non-branched cities struggled to reach 1929 levels of activity. Having access to credit from 1929 to 1933 both softened the blow of the aggregate recession and led to persistently stronger recoveries. Labor markets indicate why these differences were so persistent. Workers in Bank of America-branched places moved out of agriculture and into retail and services, which employed particularly highly-skilled workers. Loan supply insulated local demand, stimulating these types of nontradable employment and skill-biased labor reallocation, which can explain the differences in economic activity which still existed after the recovery was well underway.Chapter Two examines the effect of the lending crunch on households' joint migration and housing outcomes. To understand how credit constraints affected housing markets during the 1930s, I combine measures of local credit supply, as proxied by Bank of America's branch network in 1929, with between-neighbor variation in World War I veteran status. In 1936, World War I veterans, most of whom were selected for service in the first American modern draft, received a surprise cash bonus equivalent to one year's per-capita annual income, relaxing their credit constraints relative to men who were observationally similar to them in terms of pre-crisis housing preferences. Non-veteran household heads in credit-scarce areas were much more likely to move between 1935 and 1940, though their place in the local housing distribution did not change. Even during the recovery, those least likely to have access to lending during the crisis were more likely to move, indicating there was still a need for credit in local housing markets after the crisis, though migration mitigated these lingering effects.To understand whether these medium-run differences in economic activity, housing, and labor markets would have persisted in the absence of World War II, I turn to the effects of Bank of America's presence on human capital formation in the third chapter, co-authored with Zachary Bleemer. I compare both city and individual-level college enrollment behavior in the 1920s and 1930s as a function of proximity to a 1929 Bank of America branch in 1930. Not only did credit insulate local economies during the financial crisis from 1929 to 1933, it increased human capital investment, as towns sent more students to college, particularly to study the majors associated with the highest income returns. An analysis of college register data linked to the 1930 and 1940 censuses shows that lower-income households drove this rise in college-sending from credit-rich areas in the 1930s. The cities with the slowest economic recoveries in the latter half of the 1930s therefore, had less human capital entering the labor market, potentially exacerbating post-financial crisis sluggish growth patterns in the long run.

ISBN: 9781085797672Subjects--Topical Terms:

517137
Economics.
Subjects--Index Terms:

Branch banking

Back to Good Times: The Real Effects of Credit in Great Depression California.
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245 1 0 $a Back to Good Times: The Real Effects of Credit in Great Depression California.
260 1 $a Ann Arbor : $b ProQuest Dissertations & Theses, $c 2019
300 $a 225 p.
500 $a Source: Dissertations Abstracts International, Volume: 81-04, Section: A.
500 $a Advisor: Taylor, Alan M.
502 $a Thesis (Ph.D.)--University of California, Davis, 2019.
506 $a This item must not be sold to any third party vendors.
520 $a In financial crises, like the Great Recession, there are often large output and employment losses from which the economy is unusually slow to recover. To isolate how these disruptions in the banking sector lead to such significant, lingering economic costs, in my dissertation, I use the unique historical setting of Great Depression California. The largest bank in California in 1929, the Bank of America, was the only bank in the country to operate in multiple metropolitan areas in 1929. As a result, it was sufficiently large and geographically-diversified to promote lending to its customers during the 1929 to 1933 banking crisis at a much higher rate than other California banks. In an effort to get, as its 1932 advertising slogan suggested "back to good times," the Bank of America cut lending by 50 percent less than the median California bank. Employing the quasi-random allocation of this bank lending shock, I explore the effect of the Bank of America's presence on Depression-era economic activity, labor markets, human capital attainment, and housing markets using a variety of empirical techniques.I compare the evolution of economic activity in cities in the 1930s based on whether or not they had a Bank of America branch at the onset of the Great Depression in Chapter One. Local credit supply affected local economies both during and after the financial crisis. Cities with Bank of America branches had ten percent smaller declines in economic activity during the crisis itself. Then, economic activity rebounded above pre-crisis levels in 1934 in credit-rich areas and stagnated elsewhere. By 1940, Bank of America-branched cities had grown by 25 percent over the course of the preceding decade, while non-branched cities struggled to reach 1929 levels of activity. Having access to credit from 1929 to 1933 both softened the blow of the aggregate recession and led to persistently stronger recoveries. Labor markets indicate why these differences were so persistent. Workers in Bank of America-branched places moved out of agriculture and into retail and services, which employed particularly highly-skilled workers. Loan supply insulated local demand, stimulating these types of nontradable employment and skill-biased labor reallocation, which can explain the differences in economic activity which still existed after the recovery was well underway.Chapter Two examines the effect of the lending crunch on households' joint migration and housing outcomes. To understand how credit constraints affected housing markets during the 1930s, I combine measures of local credit supply, as proxied by Bank of America's branch network in 1929, with between-neighbor variation in World War I veteran status. In 1936, World War I veterans, most of whom were selected for service in the first American modern draft, received a surprise cash bonus equivalent to one year's per-capita annual income, relaxing their credit constraints relative to men who were observationally similar to them in terms of pre-crisis housing preferences. Non-veteran household heads in credit-scarce areas were much more likely to move between 1935 and 1940, though their place in the local housing distribution did not change. Even during the recovery, those least likely to have access to lending during the crisis were more likely to move, indicating there was still a need for credit in local housing markets after the crisis, though migration mitigated these lingering effects.To understand whether these medium-run differences in economic activity, housing, and labor markets would have persisted in the absence of World War II, I turn to the effects of Bank of America's presence on human capital formation in the third chapter, co-authored with Zachary Bleemer. I compare both city and individual-level college enrollment behavior in the 1920s and 1930s as a function of proximity to a 1929 Bank of America branch in 1930. Not only did credit insulate local economies during the financial crisis from 1929 to 1933, it increased human capital investment, as towns sent more students to college, particularly to study the majors associated with the highest income returns. An analysis of college register data linked to the 1930 and 1940 censuses shows that lower-income households drove this rise in college-sending from credit-rich areas in the 1930s. The cities with the slowest economic recoveries in the latter half of the 1930s therefore, had less human capital entering the labor market, potentially exacerbating post-financial crisis sluggish growth patterns in the long run.
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650 4 $a Economic history. $2 fast $3 548503
650 4 $a American history. $3 2122692
653 $a Branch banking
653 $a Economic recovery
653 $a Financial crisis
653 $a Great Depression
653 $a Macroeconomics
653 $a Social science
653 $a California
653 $a Bank of America
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710 2 $a University of California, Davis. $b Economics. $3 1674951
773 0 $t Dissertations Abstracts International $g 81-04A.
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792 $a 2019
793 $a English
856 4 0 $u http://pqdd.sinica.edu.tw/twdaoapp/servlet/advanced?query=13896259