Work detail

The banking crisis 1929 -1933

Author: Bc. Petra Strnadová
Year: 2016 - summer
Leaders: PhDr. Jaromír Baxa Ph.D.
Consultants:
Work type: Bachelors
Language: English
Pages: 66
Awards and prizes:
Link: https://is.cuni.cz/webapps/zzp/detail/165034/
Abstract: The issue of banking crises is of a significant importance due to their impact on the economic
situation and having revealed the main causes of a bank distress, it should be possible to avoid some
of them in the future by taking appropriate measures. The banking crisis during the Great Depression
belongs to the biggest crises in the history and provides a great opportunity to properly examine the
behaviour of U.S. banks. Therefore, the aim of my thesis is to identify the key moments of the
banking crisis, analyse the adopted policies and regulations, reveal the main causes of bank
suspensions and to examine the bank balance sheets to state which type of bank was the most
resilient. The results implied that the crucial event was a fall of a large investment bank in 1930 that
initiated the wave of banking panic when banks started fighting against both illiquidity and
insolvency problems. The analysis showed that mutual saving banks were the most successful and
that the trust of the public together with insufficient deposit insurance are key factors influencing the
bank runs. However, the major drawback is considered to be the excessive risk banks were facing
even before the stock market crash.
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